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Category Archive: ‘Real Estate Investing’

Happy Easter

sunriseHT – Daytrip, Happy Easter to you and your family!  A story about buy-and-hold, which is highly recommended (buy as many houses as you have kids, in case prices get way out of hand).

http://www.latimes.com/business/la-fi-first-time-landlords-20140405,0,5071734,full.story#axzz2zOvSJDIv

An excerpt:

Buyers who bought at the bottom of the market in 2009 got a bargain. Then  came years of opportunity to refinance into record-low interest rates. That  means many owners can rent out their home for more than it costs them each  month, even with taxes and other ownership costs figured in.

With the tenant covering the note, they can build equity — especially if home prices continue to rise.

“It’s a market-based decision,” Henson said. “They know they can get really  high rents right now. If I’m locked in on a 30-year fixed [mortgage] at 4%, and  if home values are going up, it can make a lot of sense.”

It did for Brian Darcy. The 36-year-old and his wife recently moved to North  Carolina to be closer to her family. Instead of listing their three-bedroom in  Manhattan Beach for sale, they signed with First Light and put it up for rent.  Within a week they had a tenant and a lease that paid more than enough to cover  the mortgage, Darcy said.

“The confluence of events kind of blew my mind,” he said.

Darcy and his wife bought the house in 2010 and always planned to move to  something bigger. With two growing children and regular visits from relatives,  it was getting to be that time. But the houses they were eyeing in Manhattan  Beach were going up in price just as fast as theirs was.

They had enough savings for a down payment in North Carolina, and he could  work from there as easily as in California. So off they went. They’re looking  for houses now and finding that their money will go a lot farther in their new  home.

The timing, Darcy said, couldn’t have been better. He estimates that his  house in Manhattan Beach is worth one-third more than he paid for it four years  ago, and he refinanced into lower interest rates. Now rents are rising.

“We bought at a good time,” Darcy said. “That’s what makes the mechanics  work.”

Many of the new landlords are affluent and financially savvy, Haberle said.  They’re not necessarily in it for the long haul, but they see a chance to profit  right now.

“These amateur landlords aren’t people who are doing this for a living,” she  said. “They just kind of happened into this opportunity.”

If this trend holds, it could mean even fewer homes for sale in an already tight market.

Read full story here:

http://www.latimes.com/business/la-fi-first-time-landlords-20140405,0,5071734,full.story#axzz2zOvSJDIv

Posted by on Apr 20, 2014 in Real Estate Investing | 2 comments

Dear Frustrated Buyer

Buyers are grabbing up everything in sight – what do you do?

dealing with insanityBe patient, commit to a price point, subtract up to $100,000 for repairs/improvements, know what/where you are willing to compromise, and buy the next good one!

It’s only sticks and stucco, you’re the one who makes it a home.

Let me help you!

Posted by on Mar 24, 2014 in Bubbleinfo TV, Encinitas, Frenzy, Jim's Take on the Market, Klinge Realty, Real Estate Investing, Why You Should Hire Jim as your Buyer's Agent | 4 comments

UTC 2br/2ba Condo

Here’s a great buy for those looking for an attractive top-floor condo with gleaming hardwood floors, vaulted ceilings, 2 garages, plus new carpet and paint – all for only $395,000!

The last sale of this model was $418,000 in December.

Conveniently located between La Jolla and the UTC mall, similar units have been advertised recently for $2,000 to $2,200 per month in Craigslist:

Across the street from this complex is a Vons shopping center that also has a Starbucks, Sushi, Shanghai Cafe, Leucadia Pizzeria, yoga, dentist, Tapioca Express and more!

https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=76

Posted by on Mar 19, 2014 in Bubbleinfo TV, Real Estate Investing | 2 comments

More on Crowdfunding

Lots of potential, but do your homework! An excerpt from marketwatch.com:

Crowdfunding in real estate comes in two flavors: tangible properties and personal mortgages.

The first is a platform where clients can browse vetted property deals, like a plan to turn an old industrial site into luxury apartments. Then, you choose what you want to invest in. Some platforms also allow you to purchase shares in existing properties and later sell your real estate ownership to other investors on the platform, providing a possible avenue for liquidity. Primarq is among the few focused solely on the residential side, enabling investors to own part of residential homes along with the actual resident of the property, and to participate in any appreciation in the home’s value.

Whereas you could spend countless hours investigating properties on your own to make a buying decision, these online platforms conduct the due diligence for you and strive to put forward quality property deals for their clients to choose from. Fees vary depending on the project and the crowdfunding firm, but typically include an upfront fee for a successful funding round with an additional annual 1% fee on your investment amount.

Some sites, like RealtyShares, charge the borrower and not the investor. Another site, GroundFloor, doesn’t currently charge any fees, but that could change. Be careful about sites that say there are no fees to join or to view investments but that may have fees once you make an investment.

Members of some sites, such as Collaperty, can write reviews. Login access or dashboards may feature performance reports and updates on your investments.

Perhaps the most intriguing aspect for those small investors is that this presents a way to get in on the ground floor. “Getting into an investment when one investment changes from one hand to another isn’t as lucrative as getting in early, on the ground floor,” Easterbrook points out.

http://www.marketwatch.com/story/how-to-use-crowdfunding-to-invest-in-real-estate-2014-02-07

Posted by on Feb 11, 2014 in Real Estate Investing | 3 comments

Flippers Causing Bubble?

Hat tip to SD Squatter for sending in this article from the wsj.com:

LADERA RANCH, Calif.—Rising home prices have fueled the return of a practice that some blamed for inflating the bubble: house flipping.

In California, the number of homes sold in recent months that had been flipped—or bought and resold within six months—has reached the highest levels since late 2005, according to PropertyRadar, a real-estate data firm. About 6,000 homes have been flipped in the state this year through April, or more than 5% of all homes sold statewide.

flipperturnaround

While flipping is re-emerging nationwide, brokers say it is happening most in California, where home prices have risen sharply over the past year. Six of the 10 largest price gains in major U.S. cities over the past year have been in California, according to Zillow. In April, home values rose by 25% from a year earlier in San Jose, San Francisco and Sacramento, and by 18% in Los Angeles.

“When prices rise, this trade works. It’s not anything more sophisticated than that,” said Christopher Thornberg, an economist with Beacon Economics in Los Angeles.

The industry is split over whether the current flipping activity could lead to potential problems. Jed Kolko, chief economist and a vice president at Trulia Inc., an online real-estate site, says the current activity isn’t indicative of a bubble. “A bubble is when prices are rising fast from high levels,” he said. “We’re not there now.”

Competition for homes “is reaching bubble proportions, and I’m very wary of it,” said Rich Worcester, a real-estate agent in San Diego who flipped about 25 homes last year for himself and clients. Mr. Worcester is representing a colleague who paid $675,000 last month for a foreclosed three-bedroom home in San Gabriel, a Los Angeles suburb. After installing new appliances, relandscaping and staging the empty house with furnishings, it hit the market for $867,000 earlier this month. Mr. Worcester said it hasn’t yet received any offers, and he conceded he may cut the price.

Investors generally make all-cash payments, which gives them an extra advantage over buyers who must complete a lengthy mortgage-approval and home-appraisal process.

Robert Ganem beat out four other offers this year when he paid $600,000 for a short sale—in which a home is sold for less than the amount owed on its mortgage—in Ladera Ranch, in southern Orange County. He made cosmetic renovations—fresh paint, new hardwood floors and kitchen tiles—before selling it a few weeks later for $755,000.

“A year ago, I couldn’t give them away. I was definitely swimming against the current,” said Mr. Ganem, who said he flipped 20 houses last year, double the previous year. Before he became a full-time real-estate investor, Mr. Ganem worked as a mortgage broker in Los Angeles. Flippers get a “bad rap” in the public eye, he said. “Most buyers want a home that’s move-in ready. We come in and make repairs that a bank or an underwater owner is not going to do.”

Meanwhile, the growing competition from investors is unwelcome news for ordinary buyers. After waiting years for prices to hit bottom, “buyers are jumping in before prices bounce so high they can’t afford it,” said Christine Donovan, a real-estate agent in Costa Mesa, Calif.

Parviz Goshtasby, who moved to Southern California three years ago, is finding few homes available to entry-level buyers in Newport Beach, where starter homes can begin at $800,000. “I slowly realized that I can’t compete with these investors,” said Dr. Goshtasby, a plastic surgeon.

After three unsuccessful offers, he agreed to pay $1.6 million for a home in January after the seller agreed to finance a 10% second-lien mortgage, but the deal fell through when the seller later got cold feet. Two weeks ago, he offered to pay the $1.2 million asking price on another home that ended up selling to a cash buyer.

http://online.wsj.com/article/SB10001424127887323463704578497143338013974.html

Posted by on May 31, 2013 in Flips, Frenzy, Real Estate Investing | 9 comments

Demand, Illusion or Real?

Comments from two readers:

1.  Can you please cover one more buyer anxiety – this one’s personal for me? I think that, after the artificial supply suppression and/or institutional investors are gone, the prices will drop. However, I’m not sure how far. So, my fear is that the prices may drop too far, which will make my purchase decision a very bad one. This is especially valid for some investment properties I’m thinking to buy.

2.  JTR, I was also thinking about the “illusion of demand”.  As both an investor and a house hunter, I see things from different points of view.  The conclusion I have come to of late is that in many of the recent bidding war or multiple offer stuations, lets say 10 offers, most likely 7 or 8 of them are from speculators/investors/flippers, with only 2 or 3 from end users, and the end users more often than not get out bid.  When this round of properties get shined up with marginal upgrades and are relisted to make a profit, will the end users still be there and will they be willing to (or more to the point, able to) pay the x+ the investor/speculator/flipper needs to make their profit?

My thoughts on each:

#1 -  Traditional investment properties are valued on their income, so you would have to believe that rents would drop for the corresponding property values to decline.  With the high difficulty of purchasing a home today, the rents should stay strong for the foreseeable future.  I don’t see any artificial supply suppression or holdbacks of normal investment properties, none getting foreclosed really.

#2  Flippers have been very successful around NSDCC, even when paying retail - but they have caught the market in the perfect upswing.  I think we will stop seeing short-sales, REO, and flippers within a year, and just see the occasional default.  It’s doubtful that the debt-tax exemption will be extended again after it expires this year, and any homeowner who has hung on this long will want to reap some equity return, or go back to making payments.

More thoughts:

An employee of Bank of America told me last week that they are finding a way to keep everyone in their house who wants to stay.  Only those borrowers who completely give up are getting foreclosed, and I’m sure every bank is taking their sweet time with the process:

San Diego County Filings

The demand is still fairly deep, and with virtually no bargains coming to market, those who are selling are reaping a nice windfall.  We got caught up in a ferocious bidding war yesterday on this property:

http://www.sdlookup.com/MLS-130025750-1815_Meadowhaven_Ct_Encinitas_CA_92024

It was listed for $895,000, though the last three model-match sales were $670,000, $765,000, and $800,000 (the $670,000 was the most recent, in January).

There were eight offers at, or above list price, and all had at least 20% down.  The seller took a full-price cash offer that will close in 15 days – and left at least $50,000 on the table for that convenience.

The worst part is that there are six other losers out there for us to compete with on the next one!

Posted by on May 30, 2013 in Market Buzz, Market Conditions, Real Estate Investing | 7 comments

Real Estate Crowdfunding

I don’t endorse this company but I like the idea:

Realty Mogul, a site where accredited investors can can pool their money to back real estate deals, is going live today.

Co-founder and Jilliene Helman argued that in the current financial landscape, real estate is “one of the ways that people can still get yields.” She also acknowledged that there’s a lot of excitement right now about equity crowdfunding for startups, but she noted that investments on Realty Mogul can start paying off in a few months (in the form of rent checks or loan payments), rather than five or ten years: “Our big focus for investors is cash flow.”

For now, Helman said Realty Mogul is “100 percent focused on accredited investors” (to qualify as an individual, you’d need to have a net worth of more than $1 million or income of more than $200,000). She also suggested that these kinds of investments could also be a good fit for the “mass affluent” — i.e., people making more than $100,000 a year who aren’t accredited investors — but the company is currently waiting for the final regulations to come out of the JOBS Act before it decides whether to actually open up to that group.

Realty Mogul was incubated by the Microsoft/TechStars Accelerator in Seattle, and it’s also announcing a $500,000 seed round (more on that in a second). Participating angel investors include Gust CEO David S. Rose, Gordon Stephenson (who’s on the board of directors at Zillow), and serial entrepreneur Sky Kruse.

Even though it’s officially launching today, Realty Mogul already funded its first project — AH Capital used the site to raise $110,000 to purchase and rehabilitate a duplex in Los Angeles.

When you join the site, you can browse a marketplace of different investments, then sign the paperwork and submit the payment for deals that you’re interested in. The investment only happens if the total funding goal is reached. If it is, you can then track your investments in an investor dashboard.

dashboard-demo

Helman said that one of her big goals is to build investor trust. For example, Realty Mogul links to all of the real estate companies’ LinkedIn profiles, so users can see whether they’re connected to the company in some way. For now, the site is limited to properties in Washington and California, although investors can participate in anywhere. Helman said she plans to expand gradually.

“We are a tech startup, and tech startups are supposed to grow as quickly as humanly possible,” Helman said. “But we’re a financial services company first and a tech startup second, so I want to grow as quickly but as conservatively as possible. We need to make sure we’re keeping investor protections first.”

Other sites for real estate crowdfunding include Fundrise and Prodigy Network.

http://techcrunch.com/2013/03/20/realty-mogul-launch/

Posted by on Mar 20, 2013 in Real Estate Investing | 6 comments