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Category Archive: ‘Real Estate Investing’

Renters On The Rise

My takeaways:

  1. Rents should be under intense pressure over the next few years.
  2. Growth of U.S. households since this blog began = about 8 million!
  3. The affluent are winning.

Hat tip to Kerry for sending this in!

LINK

Ten years after the U.S. housing market crashed, some things have gotten worse instead of better.

More U.S. households are headed by renters than at any point since at least 1965, according to new analysis of Census Bureau data by the Pew Research Center, a nonprofit think tank in Washington, D.C. “The total number of households in the United States grew by 7.6 million between 2006 and 2016,” it found. “But over the same period, the number of households headed by owners remained relatively flat, in part because of the lingering effects of the housing crisis.” And the rise in renters is significant, even accounting for the growth in the population over the last half-century.

The number of households owning their home has fallen since the peak of the U.S. property bubble in 2006, Pew found, while the percentage of households renting rose to nearly 37% last year from just over 31% in 2006. The 2016 rate is slightly less than the 37% in 1965. “Certain demographic groups ­— such as young adults, nonwhites and the lesser educated — have historically been more likely to rent than others,” Pew found. “However, rental rates have also increased among some groups that have traditionally been less likely to rent, including whites and middle-aged adults.”

Adults younger than 35 continue to be the most likely of all age groups to rent. In 2016, 65% of all households headed by people younger than 35 were renting, up from 57% a decade earlier. Last year, 41% of households headed by someone aged 35 to 44 were renting, up from 31% of all households in 2006. Rental households headed by someone aged 45 to 64 rose to 22% of all households in 2006 from 28% in 2016. But among baby boomers and the oldest Americans — those 65 or older — the rental rate remained steady at around 20%.

One reason so many people are renting: Only 45% of renters on average can afford the payments on a median-priced home in their area, according to a report on the state of housing from Harvard University’s Joint Center for Housing Studies released last June. Buying a house is even more out of reach for renters in expensive markets such as the West Coast, the Northeast and Florida. In these parts of the country, as few as 10% of renters could afford the mortgage payments if they bought a home, the report found. Economists recommend spending no more than 30% of gross income on housing.

LINK

Posted by on Jul 20, 2017 in Jim's Take on the Market, Market Conditions, Real Estate Investing | 3 comments

Australian Deals Under $2M

SQUALID dumps including completely unliveable houses are up for sale as the real estate market prepares for a “Super Saturday” of auctions.

The number of houses advertised for sale in Sydney is on a three-year high, reflecting a boom of 13 per cent since this time last year.

The larger selection of properties means buyers are “less likely to be blown out of the water by whopping great bids”, the Daily Telegraph reported.

And there is less competition for complete “fixer uppers”, crumbling, derelict old houses ready to be snapped up by brave renovators.

Real Estate Institute of NSW president John Cunningham said buyers could compete for homes this weekend with the pressure easing off a previously crowded field for a handful of homes.

Investors had begun to withdraw from purchases as banks restricted investment loans.  This put ordinary buyers in a stronger position to negotiate deals for houses with defects.


More deals here:

LINK

Posted by on Jul 16, 2017 in Jim's Take on the Market, Real Estate Investing | 1 comment

Windansea 4-Plex

Two new listings in La Jolla in two days!

The fourplex is 313-319 Nautilus, which is just seven doors up from the world-famous Windansea Beach.  They are similar 1-bedroom units, built in 1951 and recently renovated.  The rents range from $2,000 to $2,195 per month on annual leases.

It’s not even a 3 cap, so investors would have to appreciate the land value and proximity to the beach to make it worth it for them.  But there has been so much development nearby, we think the eventual buyer will tear it down and build new.

List price is $2,350,000, which is the appraised value.

Here is the property manager’s interior tour:

Beautiful remodeled one bedroom cottage steps to beach in best area of Windansea. Designer upgrades include tiled bath and kitchen- new fixtures, cabinets, counters and new stove, fridge, microwave and dishwasher plus all new flooring. This immaculate cottage is bright and sunny and comes with a Garage included. The unit has high open beam ceilings.

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Posted by on Jul 1, 2017 in Jim's Take on the Market, La Jolla, Real Estate Investing, Thinking of Building?, Thinking of Buying?, Why You Should List With Jim | 0 comments

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