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Category Archive: ‘Real Estate Investing’

Investor Financing For Flips?

Big-money investors are entering the real estate space, though not in California yet – but it’s just a matter of time.

Notorious R.O.B. explores whether there would be much difference between selling to an investor, and selling with a realtor on the open market:

http://www.notorious-rob.com/2017/06/are-investor-offers-always-worse/

But he also brings up a curious thought – what if the investors re-sell the house, and carry the financing for the buyer? An excerpt:

Longtime readers know that I think the most interesting possibility is that companies like Opendoor, Offerpad, and others are looking at revolutionizing the home financing process by offering direct seller financing to buyers. That was premised on the idea that these guys would resell their loans as private label RMBS.

What if they figure out a way to just hold on to the loans and service them directly in some fashion?

If investors were selling re-conditioned homes and offering to self-finance the purchase, they could bring in a whole new set of homebuyers that can’t get a loan now.  They wouldn’t finance just anybody, but they could pick up those who get left out of the current mortgage guidelines for silly reasons.  If they had sensible guidelines, they could even become the go-to lender – you just have to buy their house, at their price, to get their financing!

Creating a new buyer pool could keep the party going for a few more years!

Read Rob’s article here:

http://www.notorious-rob.com/2017/06/are-investor-offers-always-worse/

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Posted by on Jun 20, 2017 in Jim's Take on the Market, Real Estate Investing, The Future | 0 comments

Buying a Crack House

Hat tip to Eddie89 for finding this article on remodeling:

http://torontolife.com/real-estate/parkdale-reno-hell/

It was a crumbling Parkdale rooming house, populated by drug users and squatters and available on the cheap. We were cash-strapped, desperate to move and hemmed in by a hot market. Five years, three contractors and $1.1 million later, our home renovation nightmare is finally over.

We realize that our story could’ve ended up much differently. We’ve learned a harsh lesson: there’s no way to shortcut a reno; they cost a lot, period. If we had just listened to the advice of realtors, architects, designers, tradespeople and many friends, we would have avoided considerable stress and, well, $100,000 in debt. We were the victims of a shoddy contractor and bad luck, but also of our own colossal ignorance and hubris.

Anyone thinking of doing their own home renovations should read full story:

http://torontolife.com/real-estate/parkdale-reno-hell/

Posted by on Jun 2, 2017 in Jim's Take on the Market, Real Estate Investing, Remodel Projects, Repairs/Improvements | 3 comments

Local Flipper Business

Here’s a video tour of Tom’s latest project, and discussion about his business.  The master suite in back was two bedrooms that he combined, and re-configured to create a large walk-in closet and right-sized master bath.

Note how he hit all the hot buttons: curb appeal, canyon lot, cantina doors, white kitchen with marble-like counters and high ceiling, great room, and quality master suite.

This will be for sale this weekend around $750,000:

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Posted by on May 20, 2017 in Bubbleinfo TV, Jim's Take on the Market, Real Estate Investing, Remodel Projects | 2 comments

Investors in Carmel Valley?

A reader asked if there has been an influx of investors around Carmel Valley.

Buying an investment property is worth considering.  Money sitting in the bank couldn’t be more idle, and the rents around the 92130 have been averaging $2/sf, which is pretty strong.  We’ve heard that big investor groups have been active around the country – are they making a local push?

I checked the tax records of the 44 homes that have sold over the last 12 months in Pacific Highlands Ranch.  These are primarily the detached homes with small yards selling in the $900,000s near Del Mar Heights Rd. and Carmel Valley Rd.

Of the 44 sales, only three had a mailing address that didn’t match the property address – a good sign that recent buyers have been mostly owner-occupants.  Only two of the 44 paid all-cash too, and there were no corporate or partnership names as buyers either.

The combined HOA/Mello-Roos payments of $500+ per month probably prevent a decent cash flow for rentals that are financed.  I doubt that Pardee or Taylor Morrison are encouraging investor buys either, so there are hurdles that would cause investors to look elsewhere.

But if they aren’t buying resales at the lower end of one of the hottest areas in the county, then their impact on the market elsewhere is probably limited too.

The owner-occupant buyers are willing to pay more money because they seek the additional value of securing a newer home in the best school district to raise their family.  Investors aren’t going to pay more than owner-occupants any time soon.

As much as we’d like to believe that there could be nefarious actions at work to undermine our local real estate market, the more I look at it, the more it seems like we’re enjoying an environment driven by owner-occupants seeking a quality place to live long-term.

Posted by on May 2, 2017 in Carmel Valley, Jim's Take on the Market, Real Estate Investing | 5 comments

3D Printing of Homes

The building of homes is getting cheaper every year – this cost $10,134.  Isn’t it inevitable that someone will build a whole community of these?

http://newatlas.com/apis-cor-3d-printed-tiny-house/48231/

Though 3D-printed architecture is still in its relative infancy, we’re already at the point that printing a basic house is feasible. 3D-printing firm Apis Cor, in collaboration with development firm PIK, recently showed off the portable 3D printer it has developed by using it to build a basic structure of a 38-sq-m (409-sq-ft) home.

The actual printing process took 24 hours and is very similar to the other 3D-printed architecture projects we’ve reported on. Put simply, the 3D printer, which looks like a small crane, extrudes cement out of a nozzle in layer after layer to create a structure.

The machine didn’t do all the work, though. The roof, insulation, windows, and other components were all added later by humans. The total cost for the project came in at just US$10,134, not including furniture or appliances.

Posted by on Mar 6, 2017 in Jim's Take on the Market, Real Estate Investing, The Future | 3 comments

Trump Effect on 1031 Exchanges

Reader socalbuyer had to send in this article about the Republicans threatening to tinker with the 1031 tax-differed exchange benefits – but who knows what will happen.  If they do eliminate the 1031s, the extra taxation on sales of investment properties would cause fewer people to sell.

Great – less inventory!

WaPo article link

Excerpts:

House Republicans are working on a proposal that, as part of an overall streamlining of the Internal Revenue Code and a reduction in tax rates, may eliminate or seriously restrict the use of tax-deferred exchanges — property swaps — under Section 1031 of the code. President Trump has identified tax revision as one of his top priorities, and legislation is expected to move quickly in the new Congress.

Loss of the ability to use an exchange would be a significant blow to “Mom and Pop” and other small-scale realty investors. According to a study posted on the website of the National Rental Home Council, there were 15.7 million rental homes in the United States as of 2015, and 99 percent of them were owned by non-institutional investors. A study by professors at the University of Florida and Syracuse University estimated that most exchanges involve relatively small properties; in 2011, 59 percent had a sale price of less than $1 million.

Exchange proponents, such as Suzanne Baker of Investment Property Exchange Services in Chicago, argue that most of the deferred taxes ultimately are collected when properties get sold for cash and that exchanges stimulate economic activity — redevelopment and upgrades of properties, for example — that would not occur if owners faced immediate taxes on their gains and therefore simply sat on them.

Bottom line: If you own investment real estate and have contemplated a Section 1031 exchange, be aware: There’s a significant possibility that tax revisions could knock your plans off track. Keep a close eye on what’s happening, because it could happen fast.

Posted by on Jan 25, 2017 in Jim's Take on the Market, Local Government, Real Estate Investing | 4 comments

Smart Growth

Those who want to get involved in smart growth/affordable-housing issues can attend the San Diego City council meeting today at 2:00pm.  The City Council members have submitted ideas, summarized here:

  •  Sell or lease government-owned land.
  •  Defer or waive permit/development fees.
  •  Streamline the approval process.
  •  Solicit state and federal funding for affordable housing projects.
  •  Encourage granny flats and smaller houses and lots.
  •  Reduce parking requirements.
  •  Tax rebates for building affordable housing.
  •  Issue specific policy on short-term vacation rentals (Airbnb).

Andrew covers the topic here:

http://www.voiceofsandiego.org/topics/government/city-councils-odd-couple-finds-common-cause-on-housing/

Posted by on Jan 25, 2017 in Builders, Jim's Take on the Market, Local Government, Real Estate Investing, The Future | 2 comments