ListedBy.com

Stephan Piscano has launched a truly creative website with totally free access & multiple functions, including online sales, free access to nationwide mls searches & social media networking.  Anyone can post properties for sale without charge, including the capacity to upload photos & video.

Buyers can go online now and shop, bid on auctions, and more.  You can find elegant luxury properties and hedge fund properties all at your fingertips.  There is information at the site for a variety of real estate professionals & services.

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Real Estate News & Trends

Hedge Funds are having quite an impact on the market.  Since we heard little about these a few years ago, many may be wondering, ” What exactly is a hedge fund?”  “A hedge fund is a private, actively managed investment fund.” (Jaeger, Robert. A. (2003) Mcgraw Hill, All About Hedge Funds; as quoted by Wikipedia, the free encyclopedia: http://en.wikipedia.org/wiki/Hedge_fund).

Richard R. Lindsey, Director of the Securities & Exchange Commission testified before Congress on hedge funds: http://www.sec.gov/news/testimony/testarchive/1998/tsty1498.htm will provide an very good overview of how these work legally & the government view of them in the marketplace.

To say the least, hedge fund activity in the real estate market this past year and moving forward is reshaping the picture of ownership of American homes.  As they look at the market and see where to put their money, they are buying up so many homes that private homeowners & small investors in some key markets are competing with them for opportunities to buy properties.  They buy homes all day long; if a home fits their criteria in a market they like, they buy it, and the next, and the next. The volume is huge.  Here are articles on that perspective from both sides: Investment firms Look to Single Family Rentals: http://www.usatoday.com/story/money/business/2012/10/21/investors-single-family-homes/1634689/.

The Bigger Pockets blog has an interesting article on small investors & hedge funds: How to Beat the Hedge Funds Buying Properties in Your Real Estate Market can be found at: http://www.biggerpockets.com/renewsblog/2012/10/22/beat-hedge-fund-buying-real-estate.   This has some good tips on navigating the market around the hedge funds.

 

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Realty 411 magazine, e-zine & more

http://realty411guide.com/ will take you to their site. Linda Pliagas, editor, does a great job.   You will find links to current & past issues of the magazine which have a wealth of information, as well as a blog, media,  & resources including a list of real estate investing clubs.  Many very active and well-respected investors and companies are included along w/ news of their activities & services offered.  Linda also does marketing for events and is a pleasure to work with.  To gain a sense of the current real estate investing community, news, events, & trends, check it out.

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Phoenix buy & hold

Update as of Aug. 1, 2012  There was some buzz about Phoenix turning around and it turns out that it may appear that way, and some underwater folks can happily sell & get out if they want to now. There are still a variety of retirees & also “sun birds” who come for the winter, and many enjoy the recreational options in Arizona.

However, a variety of experts warn: investors watch out.  There is no real growth behind the rise in prices, no substantial change in available jobs.  Instead, what we have is buyers pouring in, including many foreign buyers & a lot of hedge fund activity.  While people are looking for appreciation, many remember well what happened so recently in 2006-2007 w/ spiraling prices and no solid growth to back it. This might be compared to investing with a crystal ball and hoping that one sees accurately.  One might gamble & win short term, but it is a gamble and not true appreciation based on economic strength.  Not to mention: what will happen when large funds buying large numbers of government properties who are required to rent instead of flip pour their properties into the rental market and are not experienced in property management?  For the buy-hold investor, many other places offer a more friendly & reliable entry price.

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Experts say this is a buy & hold market at this time. Even the very experienced pros are having difficulty finding as many properties to flip as they would like, as there are people showing up at the auctions to buy homes, creating an increase in demand over the past year that result in smaller margins for flippers.  Many properties are cash flowing at 1% rent ratios in solid neighborhoods that are well liked and have good future potential, according to those who watch the local economy.  For example, Intel is a source of good jobs in the East Valley, Chandler & Gilbert in particular, a popular area.  There is a diversified economy there. Many investors are pouring into the area and now that the market has rebounded a bit people are noticing, however folks say there is a large shadow inventory there and who knows what the banks will do tomorrow?  While there are many investors pouring in here and many nonlocal & foreign, still the market is only very slightly strengthened overall. Yahoo real estate listed Phoenix (Feb 2012) as one of 10 top rebounding areas in the nation, however I wonder if it is simply a popular place to buy and when the surplus dries up, investors will go wherever looks good next; I have not heard of any significant economic trends to support the thought that the market is really rebounding at this time.

Too many investor owned properties can negatively impact an otherwise nice enough neighborhood over time.   Don’t just look at recently sold comps for values; look also at what is on the mls today; there is still room for fluctuation.  There may be a surprise if the market moves quickly.  While listing prices of course tend to float above sale prices, if they drop suddenly, it is good to know it now, and if banks suddenly decide to drop some inventory on the market, that can happen.  But then again, values may hold and continue to rebound, all a product of supply vs demand.  It is good for investors to be aware of the % of owner occupied to investor occupied homes if  & where you buy.

While the  bank auctions can be exciting and have some very interesting inventory, it is a fast moving game to buy there with often very little time to do much due diligence.   Since the inventory has lessened, competition can be tight.  Home buyers  have discovered the auctions and so investors are competing against them, which of course decreases the bargains.   Even the local pros are having difficulty buying w/ the equity they need.

If you are interested in the Phoenix area market, please be sure to research the neighborhoods and local demographics; we did hear some conflicting reports about population shifts while there and crime can be a factor in some areas. We heard reports of great cash flows in 3-4 plexes, however I was warned multiple times by local people not to consider those, which are generally in older neighborhoods and there is surplus inventory for the rental market there.   Also please be careful about buying for projected appreciation, because that is only speculation and opinion at this time.   Also some of the further outlying communities have lovely homes and low prices, but there is a reason for this, and the commute to work is part of that reason.

Posted in Investing In vs Out of State; The 1% Rule;, Phoenix, AZ | 4 Comments

10 steps to get started: Turn the Maze into a Map

Why real estate: getting clear on your Intention:
While many people have their favorite way of storing money for a variety of reasons, the return is so low in many places (stocks, banks, etc) that many people and institutions are turning to real estate. It is not difficult to create a steady income stream with a predictable return on investment, and many people are using self-directed IRAs to invest their retirement funds.  Now we are seeing $ pouring into the country and real estate market from a variety of sources, including international buyers.   With the government and some banks  drying up surplus inventory &  requiring some bulk property buyers (who buy many properties at the same time) to rent rather than turn houses back onto the mls (multiple listing service) for resale, there is less surplus inventory on the market for sale.  Even very experienced investing Pros are often finding that bargains are getting harder to find.  Many people are thinking this is the year to buy for the buy & hold folks and, when possible, homeowners.

Step 1: Recognizing your goals & needs  Consider options and choose: Do you want to be an active or passive investor?  Do you want your money to grow w/ little supervision from you at an agreed upon rate, or do you want to be actively involved in managing your investment, potentially maximizing your potential profit?  For example, passive investors may prefer to buy notes (that is, to agree to create a loan contract with the loan being secured by real estate that is worth more than the note/ loan, with an agreed upon rate and term for the note).  Be wise whom you make this type of agreement with!  

An active investor, on the other hand, is involved with the management of the investment, such as managing the rental & repairs for a property or hiring others to do the same.  This choice can change over time, and may differ according to the specifics or timing of a particular investment, and will vary quite a bit according to the amount of time an investor has to devote to their investments. I have never seen better returns on investments, better bargain prices for rent ready properties with outstanding cash flow and choice of active or passive investments, handled w/ integrity and clarity, than what is currently offered by Summit Assets Group.   One note here: when buying a rental property, there is typically a tradeoff in that buying in a higher priced neighborhood will typically have less cash flow than buying in a less pricey neighborhood.  This, again, is personal choice.  I have seen phenomenal cash flows in neighborhoods that I would never be in, and normal cash flows in many areas that are perfectly good for a variety of reasons, but not particularly exceptional.   The buyer for Summit Assets Group, whom I am investing with, is the director, Lori Greymont, who has sold more than 1350 properties since 2009; she knows which neighborhoods to buy in and which to stay out of.

Step 2: Staying Safe: Risk Management.   Own your power: remember, nobody cares as much about your money as you do. Do NOT just trust someone else whom you think knows more than you do and buy a property because you think they will take care of you. They may be 100% ethical, but is a particular investment the right move for you? Take the time to learn about what you want to do, the market you want to be in, the strategy that seems best for you. Learn from others, don’t impulse buy,  and don’t let either naysayers or marketers discourage you or separate you from your money without providing good information & value. Remember that lovable old Uncle Harry or Aunt Mildred really may not know very much about the opportunity that you are looking at, and when you listen to someone consider how knowledgeable they are about the subject.

Step 3: Consider the Return on Investment (ROI) This is a standard for comparing different opportunities. You will hear people ask again and again, when considering investment opportunities: what is the ROI?  Verify & understand the numbers.  The cap rate or capitalization rate is explained here: http://en.wikipedia.org/wiki/Capitalization_rate.  For a very quick rule of thumb comparing single family homes (not condos, which have the homeowners organization association or HOA fees),  I often use the rent ratio, explained in this post: Investing in vs out of state; The 1% rule.

Step 4: How to check people out: First of all, who recommends the person / organization you are considering doing business with? Do they have a reputation for providing good customer service? Do they offer resources to verify what they are telling you?   Learn about the area you are considering buying in.   Where do people work?  What is the vacancy rate, days to rent, trends in values, etc.?  You can use some of the links posted under “Handy websites” to do market research and learn about different areas. Buy from people who are interested in helping  you to make well-informed choices.

Step 5: Become Educated: Get involved in a learning community where you can ask questions and have the support of others who have more experience than you do / are learning along with you. Do not be afraid to move forward once you have done your research. Not to decide is to decide, and to do nothing involves risk as well in our current inflationary economy. Research & learn, then take careful, planned action according to your needs & goals, after getting the advice of others who are successful in doing what you want to do.    

Summit Assets Group is also creating a vital online learning community through their group coaching program at a reasonable price for people who want to learn together.  I am in their coaching program and find it superior to other similar programs I have been involved with. There is time for your questions to be answered. The information is very good.   Downloading the ebook link posted under Thoughts as: Free ebook on Creative Investing Strategies w/ great ROI will take you to the site, or just call Dan Noble in step 8 below.

Also, ask: “Do I expect success in Life?” People who have a lot of things going wrong should probably not get into real estate. This is a business for people who seriously intend to create success in an area that is presenting an opportunity right now that happens once in the history of the planet.

Step 6: Build your network: Look around for classes and real estate investing clubs to join; meetups can be useful too.  Be wary of free or very cheap presentations that are really thinly disguised pitch-a-thons & high priced training seminars. Reputable skilled investors often have very good trainings available for a reasonable cost.  These can often be found through reputable real estate investing associations.  It does take time & money to  create events, so don’t expect to get a lot for free unless someone will be marketing to you.

Step 7: Look at samples of the strategy you are considering; discuss them with someone who is familiar with those strategies. Will you be using a self-directed IRA?  Who is good with that?  Will you be holding property and renting it?  Who believes in and is holding property for long term?  Do you want some fast cash through a flip, which may have more risk? Again, who has done that and will be good to advise you and share what they learned?  As you listen to a variety of people  discuss what they do, you will gain a sense of choices of activities that may be of interest for you.  You may want to stick with one plan, or you may want to change and adapt what you do as you learn and gain experience.  Learn what people whom you respect are doing that works for them.

Step 8: Set long & short term goals for yourself. Create your plan and a timeline for moving forward. Consider when you want to have a desired result and then plan backward to set short term goals along your path to your long term result.  For a free review of how to meet your investing goals and  a projected 10 year plan to show how several options would play out for you over time & suit your investment needs, I suggest contacting Dan Noble @ dan@summitassetsgroup.com; his telephone # is 408 268-9777  and if not available when you call, he is very good about getting back to folks promptly.  (Note: Assets is plural.)   Dan is very knowledgeable with years of experience in real estate and investing and can compare different strategies to see what would meet your goals.  You do not need to live locally to take advantage of this offer.

Step 9: Take action. Move forward with your plan.

Step 10: Review what you have done; what is the next best step? What worked well? What would you do differently next time?

Real estate investing can be great fun.  It is also serious business. Even pros can make mistakes. As the old saying goes, “An ounce of prevention is worth a pound of cure.”   There  are many interesting people and the community and economy are alive changing all the time, an evolving culture wherein new opportunities for investing present themselves which were not available in the past.  However, be smart and careful with your choices. Do not impulse.  People are often willing to share. It is very good to join a reputable investing association, not one which just pushes inventory but one wherein people come together to learn and share.  For those in the San Francisco south bay area, I host a meetup group which will be a place to meet other investors & learn together. It is called Real Estate Investing in 2012 and easy to find online.  http://www.meetup.com/Real-Estate-Investing-in-2012.

Posted in 10 Steps to Get Started: Turn the Maze into a Map | 6 Comments

Buying in & out of state, the 1% rule updated, cash flows

Well, it seems that many folks like buying in California since we live here and can afford it better than we could a few years ago. So true. Yet, for me, stretching the $ I have to invest is important, and the cash flows and return on investment that can be found out of state often are simply better than can be found locally.

In the old days (before the last giant spike & fall) a 1% rent ratio was considered the rule of thumb & good. For example, to buy a property for $100,000 and rent for $1000 gave a ratio of renting for 1% of the purchase price, called “the 1% rule.”  When values were flying about 5 years ago, people compared 10% appreciation ($10,000 on a $100,000 property) to perhaps $250 / month or $3000/ year positive cash flow; see why it seemed like a no-brainer to invest for appreciation? Then, as values continued to climb, even more people were willing to take less and less cash flow to even negative cash flow in order to hope to win out on the appreciation, which at times went to 15%, 20%, or even higher.  Well of course what happened to people who invested that way all depended on if they sold in time.

When considering where to buy, it may be nice to be able to hop in a car and drive to a property that one owns, however a good property manager and other on-the-ground people can go a very long way in mitigating that need to visit a property, local or not. When I flipped a property once in Utah, I found my agent online and liked the way he handled the conversation and runs his business, and he did everything right, promptly, and with integrity.  I actually never met him, however he handled our communications in a manner that was pleasant and trustworthy.  There was far less worry with that deal than with a property I owned in California w/ an inherited tenant and management, which both needed to be replaced. Similarly, other properties I invested in also have performed largely on the basis of the management/ agent/ other people I found to work with. It has been my experience that finding good people to work with and knowing the area, demographics, economy, and so on is vital, whether the property is local or not. I have friend who lives largely on her real estate income, and one of her favorite properties is on the opposite side of the continent, in Myrtle Beach; it performs well for her and she changed management when needed to create that.  

BE SURE TO read lease agreements and property manager agreements carefully before agreeing on a property manager. Understand policies and if needed discuss your plans w/ an investor who is experienced in hiring property managers.  The old saying about an ounce of prevention being worth a pound of cure is so true here.

Posted in Investing In vs Out of State; The 1% Rule; | 32 Comments

Handy websites

No particular guarantee; just think these are interesting & may have some useful information:

Here is new one to add: www.finestexpert.com gives values & rents & more.

rent rate check: rentometer.com

For comps: Realestateabc.com. Sometimes nothing comes up, however other times a very nice list of good comps w/ local map comes up.  No contact info required and no one will contact you. 

Another quick check for comps: http://www.cyberhomes.com. 

Also: http://www.realtytrac.com, which also has a search engine & trend data listed by state and for an address you search.

For charts & trends galore: www.city-data.com.

Demographics for different cities/areas – rents etc. www.bestplaces.net
(Not: bestplaces.com.)

DataQuick Empowers More Effective Decision Making”: http://www.dataquick.com/

Sean O’Toole,  local expert, provides data for 5 Western states on a monthly basis.  http://www.foreclosureradar.com

Alameda Co. trends:   http://rereport.com/alc/main.html

Giant online bulletin board for ads :  www.backpage.com

For foreclosure research, I like fanniemae.com, link homepath.com.  Reputation varies as to how it is to work w/ Fannie Mae, however I have found much good research at this site for a variety of locations. This is also a handy way to find bank agents for Fannie Mae properties.  Sometimes they also have interesting information about the neighborhoods.

http://www.fhfa.gov/ Federal Housing Finance  Agency — the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the 12 Federal Home Loan Banks, has a link for the latest  house price index, regional state, & city.

free information to help people starting their own businesses, provided by retired business professionals, online courses, local workshops, etc. www.score.org. There is one in the San Jose area which offers workshops for about $25-$40.

Understanding & learning how to improve your credit score: http://www.myfico.com/CreditEducation/ImproveYourScore.aspx

News: Realestatejournal.com Wall Street Journal, real estate page, international & domestic.

housingeconomics.com–A monthly economic and housing overview from the National Association of Homebuilders

NAHB Directory of Professional Remodelers http://www.nahb.org/directory.aspx?directoryID=387

Posted in Handy Websites | 3 Comments

Interesting e-book on creative strategies

 

Written for people looking for great Return On Investment through active investing, this ebook, written by Lori Greymont, shows examples of several strategies she has used which utilize individually selected  wholesale properties for making a great profit.  Strategies include lease options with built in equity, loan participation, & equity share agreements with sample numbers for real properties she bought & sold during the recession.  Figures for costs will need to be adjusted for the current economic environment.  Lori is well-respected in the local community for her integrity and the quality of her training. 

The ebook is still available by email but not by download at this time. To receive a copy, send the request to Carolyn@cjwheeler.com; this is not an automated response system but I will send it to you. 

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