​Can you buy a piece of a shopping mall? 
See question No. 3

Real estate is an important component of the U.S. and global economies. For many Americans, homeownership doubles as a first investment. Beyond a primary residence, investors also can buy into the commercial real-estate market: Office buildings, multifamily housing, hospitals, parking lots, storage facilities, retail properties, call centers, distribution hubs, hotels and restaurants form a sector with its own economic ups and downs.

In 2016, the S&P 500 recognized real estate as its own sector, separating it from financial services where it had been buried for years—a move some view as a portent of more real-estate investment to come and that others view with indifference. Currently, real estate accounts for less than 5% of the S&P 500 by market cap.

How much do you know about real estate—and real-estate investing?

1. What foreign country’s investors are buying the most U.S. commercial real estate?

A. China

B. Canada

C. Germany

D. Japan

ANSWER: B. Canada, according to research from JLL Research and Real Capital Analytics. During the first half of 2017, Canada accounted for 30% of all foreign investment in U.S. commercial real estate, followed closely by China (21%), Singapore (15%) and Germany (7%).

2. How do investors participate in the real-estate sector?

A. Mutual funds and ETFs

B. Stocks

C. As direct owners/landlords

D. All of the above

ANSWER: D. Many investors inadvertently own real estate. Broad-themed mutual funds typically allocate a portion of their holdings to real estate. They own it directly, too, sometimes in the form of an exchange-traded fund. You can buy stock in home builders or REITs. You also can buy investment properties for income, and in some cases you can carry these properties within an IRA. Some argue that owning a primary home makes the average investor “overweight” in real estate, so portfolio allocations to real estate need not comprise a large percentage of holdings.

3. What is a REIT?

A. Real-estate investment trust

B. Real-estate investment tax

C. Real-estate insurance tariff

D. Real-estate investor trade

ANSWER: A. Real-estate investment trusts are investment vehicles that contain securitized portfolios of commercial properties such as office buildings, apartment buildings, retail sites, hotels, storage facilities, parking garages, data centers, even cannabis farms. You can buy shares (typically called units) in a REIT, or invest in REITs indirectly since REIT units are often found within mutual-fund portfolios or inside target-date funds.


4. Which commercial real-estate subsector is least prosperous now?

A. Multifamily housing

B. Industrial

C. Office

D. Retail

ANSWER: D. Retail real estate ranks last among six commercial categories both in terms of its investment and development prospects, according to a joint report on the 2018 commercial real-estate market from PricewaterhouseCoopers (PwC) and the Urban Land Institute. Headwinds in the retail category stem from department-store obsolescence, changes in apparel spending, consumer demographics and the impact of e-commerce and other technology on shopping experiences.

5. What were typical residential mortgage terms before the creation of the Federal Housing Administration (FHA) and the Federal National Mortgage Association (Fannie Mae) in the 1930s?

A. 3.5% down with a 30-year payoff

B. 20% down with a 20-year or 30-year payoff period

C. 50% down with a 10-year payoff

D. 0% down, interest-only loans with a 30-year payoff period

ANSWER: C. Before the creation of the FHA and Fannie Mae, it was hard for the average American to come up with a 50% down payment and then pay off the remaining 50% of a home’s value in only a decade; at that time, the homeownership rate was below 49% (versus the current rate of 63.9%, according to U.S. Census data). When the FHA and Fannie Mae were created, insurance against defaults became available to borrowers and banks loosened loan terms to 20% down with a longer payoff. In the ensuing decades, borrowers could make much lower down payments—as little as 0% or 3.5%.

6. How did real estate contribute to the most recent financial crisis and related recession?

A. Lenders relaxed standards and underwrote loans that wouldn’t fly today

B. Banks knowingly and unknowingly sold mortgage securities containing unsound assets, and ratings firms failed to accurately rate real-estate debt sold to the secondary market

C. Investors speculated on housing and homeowners

D. All of the above

ANSWER: D. of the above. You can read all about it in the Financial Crisis Inquiry Commission’s 2011 report. For a more fun look at what happened, watch the movie “The Big Short.”

7. During the real-estate bubble, which economist was known as “Dr. Doom”?

A. Robert Shiller, author of “Irrational Exuberance” and co-developer of the Case-Shiller Home Price Index

B. Nouriel Roubini, NYU professor, formerly an economist advising the White House Council of Economic Advisers


C. Karl Case, the late professor/researcher who co-developed the Case-Shiller Home Price Index

D. Ben Bernanke, former Fed chairman, now a Brookings Institution economist

ANSWER: B. Nouriel Roubini, a global macroeconomist, boasts the title “Dr. Doom” for his prognostications about the 2008 real estate and credit-market meltdowns. He is predicting more economic drama.


8. What U.S. city has the lowest rate of apartment vacancy?

A. New York

B. Seattle

C. San Francisco

D. Boston

ANSWER: A. New York has a 1.9% vacancy rate, tightest in the U.S., followed by Boston (2.6%), San Francisco (2.8%), Los Angeles (2.9%), Seattle (3%) and Washington, D.C. (3.8%), says National Real Estate Investor.

9. Which commercial real estate approach isn’t recommended in 2018?

A. Take advantage of demand for new housing

B. Bet on property price appreciation

C. Invest in “experiential retail”

D. Senior housing

ANSWER: B. Investors are advised to look at cash flow from income as a source of benefit rather than property-value appreciation, according to the PwC-Urban Land Institute report on commercial real estate. “Rent recoveries have matured in many markets and across property types. Cap rates have been compressed, but are leveling off,” the report says. “Appreciation is likely to be muted even in secondary and tertiary markets. That means focusing on cash flow and asset management in the immediate and midterm future.”


The article “How Well Do You Know Real Estate? Time to Find Out” first appeared in The Wall Street Journal.

During these winter months, when you cannot go outside and work on your home’s exterior or plant in the garden, you can nevertheless make use of your time inside, especially in the kitchen. Perhaps your faded kitchen needs a new and creative touch. Many homeowners don’t even like to spend time in the kitchen because it’s so gloomy, but they have limited time and finances to make improvements. Fortunately, kitchen renovations do not have to drain your budget, take a lot of time, or create a total upheaval in your kitchen. Try one or all of the following tips for a quick kitchen renewal.
1. Try Painting
Paint works wonders on everything. A dull room can be transformed into a vibrant, clean atmosphere with just a few strokes of a brush and a gallon of paint. If your old wood-tone cabinets fail to catch your eye, try spray-painting them with a very glossy white or hand-painting them with an oil-based paint in creamy white. For only a few dollars, you can paint your cabinetry, creating a dramatic improvement very quickly. After painting the cabinets, repaint the walls with a latex, satin enamel in a soft sheen or with no sheen. Use another color to contrast your new-looking cabinets.
2. Replace Pulls, Hinges, and Knobs
New hardware can give even the worst cabinetry a handsome new look. Consider vintage hardware for a unique décor. Expensive pulls can totally change the look and feel of your kitchen.
3. Remove a Few Doors
Examine your kitchen cabinets and consider which doors could be removed to expose the shelving within. Open shelving not only makes a room look larger, but also displays your favorite dishes, cookbooks, glasses, or anything else. This is an easy way to create an impressive new look for your kitchen. Take this idea one step further by painting the inside of your newly exposed shelving. You can use the same color as the cabinets for consistency, or a bright, complementary color to create a contrast.
4. Replace Solid Doors with Glass Fronts
By replacing solid cupboard doors with glass fronts, you open up the room and have an opportunity to display dishes, glassware, silver, or anything else. The glass can be clear or frosted. With a slightly larger investment, you can get vintage doors that are mastered to fit. You can also hang a sheer fabric behind the glass fronts. If you’re already considering removing a few doors to open up shelving, glass fronts can be a beautiful complement.
5. Change the Lighting
Wire Suspension Lights: Make any space look contemporary and new. Track Lights: Brighten up any kitchen. Paper Lanterns: Add life, character, and originality. Halogen Bulbs: Make a box or rectangle of lights to make a small kitchen feel larger.
6. Tile a Countertop
Tiling your countertops is a great way to get new countertops in just one day. If you have a small kitchen, this project brings added benefits, since you can opt for a more expensive tile and still not have to pay a lot of money, because there won’t be much surface area to cover.
7. Replace the Flooring
Changing your old flooring does not have to be difficult or expensive. Today there are countless patterned, self-stick tiles that can be laid quickly and easily. Another alternative is to paint the floor black or another dark color. Then tie in the wall or cabinet color by using a ragging or faux finish over the dark color.
8. Finish the New Look with Faucets
You will be amazed to see how much of a difference a new faucet can make in your kitchen. The small amount of money you put into a new faucet and pull-out spray can make your kitchen sing with new style.
9. Add a Reflection
One of the easiest and best ways to make a space feel larger without expanding the room is to add a framed mirror at the end of a galley kitchen. This adds dimension to the room. Plus, the mirror reflects already existing light, which will brighten up your kitchen.
10. Change the Window Treatment
Curtains fade and, over time, begin to feel like furniture or part of the wall. We forget that changing them can easily upgrade the feel and look of the room. A matchstick blind cut to size can add texture and light control. ​

A single unexpected expense and a missed mortgage payment can set off a string of events that snowball into a complicated problem. When you miss a payment, you have a short grace period, usually 10-15 days, during which you can pay without penalty. After that, a late fee will be assessed by the lender, which is often 5% of the amount overdue. It doesn’t take long for that one unaffordable mortgage payment to become even more out of reach, putting foreclosure proceedings into action.

Foreclosure involves many complex steps according to a timeline specified by Colorado law. When there is an opportunity for you to do something to avoid a Colorado foreclosure, do it as soon as possible and follow the instructions you are given to the letter. Even small errors can potentially derail you from keeping your home. Let’s take a look at how the foreclosure process unfolds and how you can respond at each step

This timeline is a simplified summary of the basic procedures under the foreclosure statute and does not attempt to cover all aspects. This is a complex statute and an attorney should be consulted before taking any steps, or making any decisions, regarding the foreclosure process.
Note that, unless otherwise stated, all references to “days” are “calendar days”. When calculating dates, if the specified date is a legal holiday, or a Saturday or Sunday, then the date is extended to next day that is not a legal holiday, Saturday or Sunday.
Pre-foreclosure

• Watch for FHA, HUD and VA loans for additional rules for when foreclosure can be commenced. For example, under HUD rules, foreclosure can be commenced only if at least 3 fully monthly installments are due and unpaid, subject to exceptions.
• At least 30 days before filing notice of election and demand and at least 30 days after default, the lender is required to mail a notice to the borrower containing the telephone numbers of the Colorado foreclosure hot line and the direct telephone number of the lender’s loss mitigation department.

Lender’s procedures on commencement of the foreclosure saleThe lender’s attorney will commence the sale by filing the following with the public trustee of the county where the property is:

• Original Notice of Election and Demand for Sale (NED).
• Original evidence of debt, and any endorsements or assignments. If the evidence of debt is mislaid, a lost instrument bond must be submitted, unless the lender is a financial institution that can provide an indemnity.
• Original recorded Deed of Trust, and any original modifications, or any partial releases, or certified copies of these documents.
• The combined notice for mailing to the persons on the mailing list.
• A deposit on the fees of the public trustee.
• Mailing list containing the names and addresses of owners, guarantors, lessees and occupants, (as shown by the public records or records of the lender), who will receive notice of the sale.
• An amended mailing list may be filed, not less than 60 days prior to the first scheduled sale date. If the amended mailing list is received by the public trustee after the mailing has been sent out, the sale will be continued for no less than 65 days after receipt of the amended mailing list. The public trustee shall send the mailing list no less than 45 days prior the actual date of sale.

Public trustee procedures on commencement of the foreclosure saleOn receipt of the request for sale, the public trustee must:

• Record the NED – no later than 10 business days after receipt of the request for sale.
• No more than 60 days and no less than 45 days prior to the first scheduled date of sale, advertise the sale in a newspaper once a week for five successive weeks (unless the deed of trust requires a longer period), only after the affidavit of posting of the deferment notice has been received. Sale is continued until this affidavit is received.
• Mail copies of the combined notice to the specified parties no less than 16 days, nor more than 30 days, after the lender has delivered the mailing list. If there is an amended mailing list, then mail the combined notice no more than 60 days and no less than 45 days prior to the first scheduled date of sale.
• Scheduled the sale of date that is not less than 110 days and not more than 125 days after the recording of the NED for non-agricultural property. For agricultural property, the date of sale must be scheduled no less than 215 days and no more than 230 days after the recording of the NED.

Note that unless otherwise stated, all references to “days” are “calendar days”. When calculating dates if the specified date is a legal holiday, or a Saturday or Sunday, then the date is extended to next day that is not a legal holiday, Saturday or Sunday.
Right to Cure:

• The borrower must give at least 15 days notice, prior to the sale, of the intention to cure.
• The public trustee must deliver a request for a statement of all sums to cure, to the lender at least 12 days prior to the sale- if not the sale is postponed for 2 weeks.
• The public trustee must receive the cure amount form the borrower by noon on the day before sale.
• The statement must be valid for at least 10 days after the date the statement is received by the public trustee, or until the last day to cure, whichever occurs first, but in any event no more than 30 days from the date of the last day to cure.
• Failure to provide the statement by the earlier of 10 business days after receipt of the request to cure, or 8 days prior to the date of sale:
  • Sale automatically postponed for 1 week and thereafter week to week until cure statement provided (but not continuance beyond 12 months from original date of sale).
  • Interest at the regular rate and not default rate during this period

Default cured:

• If the default has cured, then:
  • A formal withdrawal must be filed with the public trustee if the NED has been recorded.
  • All costs to date must be paid, including the fees of the public trustee, together with the withdrawal fee.
  • If a Rule 120 proceeding has commenced, this proceeding must be withdrawn, or the order vacated (if the order has been granted).
• If foreclosing party fails to withdraw the sale, the public trustee can withdraw the sale 45 days after the last possible date of sale, which is 12 months from the originally designated date of sale.

Rule 120 Hearing (Colorado Rules of Civil Procedure Rule 120):

• The notice of the Rule 120 proceeding must be served on the borrower, record owner of the property, and all other person who may have an interest in the property at least 14 days prior to the date set for the hearing.
• The hearing must be scheduled at least 16 days prior to the sale.
• The order must be received by the public trustee by noon on the second business day prior to the date of the sale. If the order is not received in time, the sale will be automatically postponed.
• The public trustee will not go to sale without this order, and a sale held without this order is invalid.

Sale of Property by the Public Trustee:

• The lender must submit its bid not later than 12 noon on the second business day prior to the date of sale. If this deadline is missed, the sale is continued for 1 week.
• The public trustee will auction the property at the time and place stated in the notice of sale, but no less than 16 days after the date of the scheduled Rule 120 hearing.
• On completion of the sale, the public trustee will issue a certificate of purchase to the successful bidder, and record copy within 5 business days of the sale.

Rescission of the Sale:

• The sale can be rescinded without a court order, if the holder of the certificate of purchase is the foreclosing party.
  Rescission must be requested within 8 business days after the sale.
• If the sale has been rescinded, the Lender can commence a new foreclosure sale scheduled not less than 30 days and not more than 45 days after the request for a new sale.

Redemption for junior lienors:

• All lienors must file notice of intention to redeem with the public trustee within 8 business days after the sale, with copies of the instruments evidencing the lien and a statement of the amounts required to redeem this lien.
• The public trustee, within 1 business day of receipt of the notice of intention to redeem, shall request the amount to redeem from the holder of the certificate of purchase.
• The lienor having the most senior party may redeem no earlier than 15 business days and not later than 19 business days after the date of sale.
• Thereafter, the lienors holding the next junior lien may redeem within 5 business days from the expiry of the previous lienor’s redemption period.
• The redemption period must be paid to the public trustee no later than 12 noon on the last day of the redemption period.
• The certificate of redemption must be recorded no earlier than 15 business days following the sale, but no later than 5 business days following the receipt of the redemption amount.
• Special redemption periods apply for liens filed by (1)The Internal Revenue Service (redemption period is 120 days from date of sale), (2) the federal government (redemption period is 1 year from the date of sale).
• No redemption period is shortened or altered by the fact that a prior lien redeemed prior to the end of that lienor’s redemption period.

Vesting of title:

• Title automatically vests at the end of all redemption periods in the holder of the last certificate of redemption.

Confirmation Deed:

• The public trustee must execute and issue a public trustee’s deed no earlier than 10 business days after both the vesting of title and the date that the public trustee has received all fees and costs.

​You've done the work to clean up your credit score, scrape together a down payment and pry a preapproval letter from your mortgage lender. Cheers!

Getting preapproved is a smart move, especially in a seller's market characterized by tight inventories and, in some regions, bidding wars. Having a lender's letter in hand signals to sellers that you're a legit buyer whose offer merits serious consideration.

Even so, a preapproval letter is just a conditional commitment. It can be withdrawn if your financial situation changes in a way that makes your lender nervous.

The best advice? "Maintain the status quo," says Scott Schang, branch manager at BuyWise Mortgage in Anaheim, California.

There are a few surefire ways to get rejected after you've been preapproved. Among them:

Quitting your job

There's nothing wrong with leaving a job to take a similar or better-paying position at another company, so long as you remain a full-time employee who gets a W-2 form at the end of the year.

If you're going from a W-2 job to a W-2 job, that's fine. However, taking a significant pay cut will raise red flags. So will switching from a salaried job to a position where you're compensated mostly on commission. And quitting your job to launch a new venture is a no-no, at least when it comes to keeping your mortgage approval.

Lending guidelines are much stricter for self-employed borrowers, and lenders typically want to see a two-year track record of self-employment income.

The best play: Wait until after you've closed on your house and started paying your mortgage to quit your job and pursue your entrepreneurial dream.

Loading up on debt

This is an obvious bit of advice, but one well worth heeding. In the weeks or months after you get preapproved and before you close on your home, keep your spending impulses on lockdown. That means no new credit cards, no car loans and no big-ticket purchases of any kind. Ignoring this rule of thumb is likely to bring scrutiny from your lender.

Running up a balance on a new credit card will lead your lender to re-examine your debt-to-income ratios, Carson warns. If you were on the borderline before your shopping spree, the new bills could kill the deal.

Paying down old debt

Say you have a preapproval letter but realize you could get a better mortgage rate with a higher credit score. Don't make the mistake of trying to be a hero -- it's likely to backfire.

Paying off delinquent debt, settling up with creditors who have charged off an old debt, canceling credit cards -- all might seem like responsible moves, but they'll hurt your credit score.

That's one of the backwards things with the credit scoring system. If you cancel a card, that will drop your credit score significantly for 60 to 90 days before it starts to creep up.

It's unclear exactly how much your score will fall if you cancel a card, but the hit could amount to as much as 40 points. Paying down an old balance presents a similar quandary. You think you're cleaning up your finances but your lender just sees more available credit, Carson says, and you could be jeopardizing your credit score.

And when it comes to credit scores, not all debt is created equal. Before you close on a home -- and ideally before you seek preapproval -- you'll need to pay off any liens, old tax bills or current debts in collection. However, if a debt has already been charged off -- that is, the creditor isn't expecting any more payments -- paying it will vault your old debt to a "current" status and actually lower your credit score.

So the rule of thumb for retiring charged-off debt is the same as the guideline for taking on new debt: Wait until after you've closed on your home.

Moving large sums of money

Down payments are a challenge for first-time buyers, and many hit up relatives for help. However, receiving any sum that amounts to more than half your regular paycheck is likely to draw scrutiny from your lender, Carson says.

Banks want to make sure you aren't laundering money. They also want to be certain any sudden windfalls are in fact gifts and not loans. If money is moving around, that's going to be a red flag for an underwriter, and they're going to pull out the magnifying glass.

The good news is that receiving a gift doesn't need to kill your preapproval. But your bank likely will require you to provide a paper trail that includes a letter stating the money is a gift and two months of bank statements from the gift giver.


The bottom line

Keep in mind credit scores are based on complex calculations, and every borrower's situation is different. In general, though, your overall financial situation matters.

If you have a gold-plated credit score and enough income to comfortably afford your loan, a new store credit card probably won't kill your deal. But if you have a borderline credit score and you're stretching to qualify, even a small hiccup could hurt your chances.