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Jim Klinge
Cell/Text: (858) 997-3801
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011

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Carlsbad Old-Spanish

One of the first houses in Carlsbad was built here on Monroe – she says it was in 1929, and the tax rolls say 1931.  In the late-1990s there was a popular article that advertised about Carlsbad being full of old-Spanish style houses, and buyers would ask about them at open houses. But it was Oceanside that’s old enough to have had dozens of houses from this era.

Posted by on Jan 18, 2018 in Bubbleinfo TV, Jim's Take on the Market | 0 comments

‘Total Loss to Investors’

Watch out for those investment groups – hat tip Richard!

A federal complaint accuses an Irvine real estate firm and its executives of siphoning off proceeds from a house-flipping venture financed largely from investors’ retirement savings funds.

Hoplon Financial Group and its two top executives — Hoplon founder and Chief Executive Daniel Benjamin Vazquez Sr., 56, of Orange County and Hoplon Chief Operating Officer Gilbert Fluetsch, 52, of Escondido — are accused of numerous securities violations in a U.S. Securities & Exchange Commission complaint filed Friday, Jan. 12.

Vazquez and Fluetsch couldn’t be reached for comment. Nor could Hoplon Financial Group be reached at the phone number posted on its website.

“Our goal is to protect our clients’ assets and safeguard what they have worked hard to build,” Hoplon’s LinkedIn page says.

According to the SEC complaint, filed in federal court in Santa Ana, Vazquez and his companies pitched their services to investors found through cold-calling and asking them to roll over their 401(k) retirement accounts into individual retirement accounts handled by brokers he was associated with.

Twenty-seven investors put up $2.18 million from 2011 to 2014 after Vazquez and Fluetsch promised their money would be used to purchase and renovate homes in a venture called the New Economic Opportunities Fund LLC, or NEON.

“In reality, they were draining most of the money from NEON’s accounts for their own purposes,” the complaint contends.

NEON purchased eight Southern California properties in 2012 and 2013, spending more than $767,000 on repairs. Subsequent sales generated $917,322 in profits, all of which were diverted to Hoplon.

“As of today, NEON has no known assets. All funds in its bank accounts have been depleted, and it holds no properties in its name,” the complaint said.

Under terms of the offering, Hoplon, Vazquez and Fluetsch were entitled to $188,197 in compensation for managing NEON, but diverted $968,436 to Hoplon and themselves.

In addition, the complaint said, NEON funds were used to pay Hoplon expenses, to cover payments for luxury cars Hoplon purchased or leased for Vazquez’ and Fluetsch’s use, and to cover such personal expenses as sports club memberships.

The complaint said $59,000 in NEON funds were diverted to pay for property improvements on Vazquez’ home and $6,500 more was spent on work performed on Fluetsch’s house.

Hoplon, Vazquez and Fluetsch “misused substantial amounts of NEON funds, resulting in a total loss to investors,” the complaint said.

Link to Article

Posted by on Jan 18, 2018 in Jim's Take on the Market, Real Estate Investing | 2 comments

N.A.R. 2018 Forecast Revisited

The National Association of Realtors has re-thought their negativity barrage on the tax reform, and is back in cheerleader mode:

While the new tax law is already in effect, here we estimate how home prices will trend in 2018 for each state. The new tax law reduces the limit on deductible mortgage debt and limits the deductibility of the real estate tax up to $10,000. These two provisions are expected to have an impact on the housing market. Moreover, a higher standard deduction may lessen the incentive to purchase a home, as fewer consumers will utilize mortgage interest and property tax deductions.

Aside from the tax reform impact, it is of utmost importance to understand that the current state of the housing market will also influence home prices. Prices are shaped by supply and demand, like any other economic asset. A shortage of supply pushes up prices, while excess supply causes prices to fall. In the past five years, housing inventory has fallen across the country and as a result, home prices continue to rise.

Link to Article


They have broken down their data for each state too.

Here is what they say about California:

In spite of California prices going up 7.9% in the third quarter of 2017, they project a 1.1% increase for 2018 – which is quite a drop-off.

How is their math?  Let’s check:

Factor 2 – Tax impact

The average interest paid for a 30-year fixed-rate mortgage:

$750K: $15,170

$1M: $20,220

What?  Just a quick look at those numbers and you can sense a mistake.  Interest on a $750,000 loan has to be more than $1,200 per month.  Thanks to Google, there are several mortgage amortization calculators online, and within 30 seconds I found this:

Even the full interest paid over the life of the loan divided by 30 is more than $15,170 (it’s $17,967 per yr).  Then they calculate the impact on existing homeowners, BUT THERE IS NO M.I.D. CHANGE FOR THEM. The new limit of $750,000 is for new home buyers, not existing.

The N.A.R. is publishing articles nationwide, and nobody checks these? If they can’t get their facts right, how reliable is anything they say?

Like my high school baseball coach used to say,

“Don’t believe anything you hear, and only half of what you see!”

Posted by on Jan 18, 2018 in Forecasts, Jim's Take on the Market, Tax Reform | 1 comment