Ah, it seems like it was just yesterday when A&E TV was premiering Flip This House and the TLC Channel was launching Flip That House. Notice these were two different shows – I guess targeting two separate target audiences who were interested in either this house or that house. Free markets bring choice to the consumer, ain’t America grand?

Well now that the housing market is starting to slow in some regions flipping is starting to lose its shine. Perhaps one of the most telling pieces of evidence that the pendulum is starting to swing is that allegations of fraud are starting to pop up even in the sanitized, staged world of reality TV. One Flip This House participant evidently didn’t even own the properties that he allegedly was flipping for big bucks. If you can’t believe what you see on reality TV then whom can you trust these days?

So these are additional bits of evidence on a fact that we already knew: flipping isn’t investing, it’s speculating. Not that there’s anything wrong with that, as they say on Seinfeld, but it’s important to know that flipping is a speculative technique that works well if the market is flying and you have a healthy risk appetite.

Flipping is glam and flash – high rollers and big bucks. But that’s so 2006, so what trend are they going to selling us next?

Well one man’s pain is another man’s profit, so expect the spotlight to fall on the short sellers and pre-foreclosure investors.  Not as glamorous as the fast rolling world of the flippers since it requires the investor to manage the unpleasant task of dealing with folks who are having their home foreclosed, but in an environment of stagnating prices and embattled mortgage holders short selling can work.

Quick primer: The bank doesn’t want to get stuck with a foreclosure. I’m always annoyed when I read these exposés about banks licking their chops to kick grandma out of her house and sell it at the auction block the minute she gets behind on her mortgage payments. In the eyes of a bank a foreclosure is a black eye; banks don’t want to own real estate, especially a house that has been trashed by a aggrieved foreclosed owner.

If the owner is getting foreclosed on a house with zero or negative equity then there is little he can do. Say his house is worth $150 thousand and he owes $160 thousand; trying to sell won’t help.

Enter the short seller. He cuts a deal w/ the owner to give him the house and simultaneously cuts a deal with the bank that he’ll pay, say, $125 thousand for them to release the lien. Voila, everyone is happy: the investor gets a quick $25 thousand in equity, the previous owner avoids the indignity of a foreclosure, and the bank avoids the time, cost and expense of trying to unload the property – a process that probably would have cost them more than the $35 thousand it just wrote off.

Note that this is nothing new. People have been doing it for years. But it about to be the new thing which will be promoted online and in the media.

If the flipping phenomenon was vulnerable to fraud, this one will be as well. Two reasons:

• It’s hard: Making money flipping houses in a booming market is as easy as falling off a log. All you need is guts and the right level of risk appetite. Making money off of pre-foreclosures and short sales is hard. There are a lot of moving parts to these deals and pulling them off requires knowledge, negotiating skill and patience.
• Dealing with vulnerable people: Short sellers promote themselves as investors who help people. And indeed many of them are good, decent people. But investing isn’t an altruistic pastime, and when a dishonest investor comes into contact with a troubled owner who is looking for a lifeline there is a potential for bad things to happen.

I’m trying to look into the crystal ball on this one. I’ll revisit in a couple of months…

Source: http://www.equityscout.com/short-sellers-and-pre-foreclosures

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Google.com tends to be my first stop when I’m considering working with a new person.  A new website called pipl takes the idea a step further.  Unlike traditional crawlers like Yahoo and Google, the pipl search engines can access various public databases – from e-commerce to social networking to government records – and therefore generates a lot more hits. 

Look yourself up – you might find that there is more info on you out there on the web than you thought.  One drawback: search for a generic name (like, say, Chris Smith) and you’ll get a whole boatload of info on all the other Chris Smith’s out there.   [19 June] Ironic postscript:  As of today this page that you’re reading right now comes up on page 1 of a Google search for "Chris Smith"

When you’re screening tenants you’ll still need to pay for a real background check, but I think this site might be useful for the quick preliminary screens I used to do on Google. 

Source: http://www.equityscout.com/a-deeper-dive-than-google

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I’ve been a USAA member for seventeen years, since I was a junior at West Point (USAA is the financial institution dedicated to serving our Armed Forces). Great service. Always. That’s why I’ve stuck with them for all these years on an almost no-bid basis, and have done a number of mortgages there. 

I’m in the middle of a 1031 exchange – selling a property and putting the proceeds into a tax deferred account to invest in another property. I’ve done the sell part, now I need to buy something. 

I put offers in on three small multi-family properties this week and needed pre-approvals to submit along with the contract. So I called USAA. The fee to fax me three pre-approvals: $150 bucks. $50 bucks per property, which would be refunded only on those contracts that closed and were financed via USAA. 

I called PHH mortgage. They took my info and faxed me the three pre-approvals for free. And fast.  I’ll do the loans with them. 

Strikes me as peculiar that USAA would chase off a customer w/ great credit and a seventeen year track record. I wrote them a letter of complaint; I’ll let you know if I get a response.  

Source: http://www.equityscout.com/usaa

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If you are an animal lover like I am, you definitely do not want to see your beloved pets or any animal for that matter, suffer when they are hurt or sick.

When your pets become ill or hurt make sure to visit the Seco Canyon Animal Clinic located in the heart of the Santa Clarita Valley.

The Seco Canyon Animal Clinic holds a dear place in my heart because not only do they help out our furry companions they also help rehabilitate wild animals such as cute little helpless and hurt birds.

The Seco Canyon Animal Clinic has a highly trained staff to assist their frightened little patients and their parents as well.

I love the fact that the Seco Canyon Animal Clinic has such great compassion for their patients like they were their own family.

For more information regarding the Seco Canyon Animal Clinic please visit the link below: http://www.secocanyonanimalclinic.biz/index.html

What a great place for our best friends to get the healing they need!

CHEERS

Source: http://activerain.com/blogsview/2266564/-los-angeles-411-when-your-beloved-pet-needs-care-make-a-visit-to-the-seco-canyon-animal-clinic-in-santa-clarita-california

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Join us for the Walk for Hope 5K and Dog Walk Saturday, April 16, 2011 in Santa Clarita, California!

The Walk for Hope 5K and Dog Walk will be held at Castaic Lake in the Santa Clarita Valley starting at 9:30 am.

After this awesome walk, there will be an all day festival, complete with yummy food, vendor’s booths and a People’s Choice Car Show.

Visitors will get to enjoy the sweet weather, an exhilarating walk and the majestic views of Castaic Lake!

The best part is that you get be with your best friend, while walking for a great cause in hope of finding a cure for breast cancer!

For more information regarding the Walk for Hope 5K and Dog Walk please visit the link: http://www.circleofhopeinc.org/events.htm#walk

What a great way to stand up against breast cancer!

CHEERS

Source: http://activerain.com/blogsview/2247606/-los-angeles-411-join-us-for-the-walk-for-hope-5k-and-dog-walk-in-santa-clarita-california-

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BankRate.com’s real estate advisor Steve McLinden does an excellent job covering ethical considerations of flipping houses for a profit. 

Property flipping has gotten a black eye as of late from shady practices that have victimized first-time buyers, at-risk communities, and the reputation of the real estate industry as a whole.  The matter hasn’t been improved by the proliferation of quick-money real estate courses and goofy reality television programs like Flip this House and Flip that House (yes, these are two different programs – just another indication of the general public’s manic appetite for all things real-estate related). 

Source: http://www.equityscout.com/ethics-and-flipping-house

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In the near future I’ll be working with Jim Kimmons , the real estate business guide for About.com to provide some content on investing in real estate – from the perspective of both the investor and the real estate professional.  Jim is a real estate broker in Taos, New Mexico and an expert on technology and real estate.  Check out Jim’s blog, and look for more investor related content in the near future. 

And when you’re done reading about real estate, About.com covers everything from roller-skating to soap operas to politics. 

Source: http://www.equityscout.com/working-with-aboutcom

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Times are tough out there and a lot of Americans are getting caught in the squeeze. As real estate investors we feel this in a number of ways: bargain foreclosures to buy (good!), a glut of rental properties depressing rental rates (bad!), fewer competing bids for quality properties (good!), longer waits to sell properties (bad!)…and the list goes on.

One thing I’m noticing is the challenge to get quality tenants. I have some properties that rent like hotcakes w/ zero vacancy time. But others, for some reason, have been more challenging. Like most property owners, I have a number of rules-of-thumb that I follow when it comes to screening tenants. But rules of thumb aren’t written in stone; they’re just guidelines. Every now and then I come across an applicant who I think will make a great tenant, but there is something or other that makes me second guess myself.

The fact of the matter is that good people get caught in bad situations sometimes, and a quality applicant can sometimes appear brandishing a blemished credit report. Don’t get me wrong – my mantra #1 is that renting to a bad tenant is twice as expensive as sitting on a vacancy for an extra month – but what is a landlord to do when her gut tells her that she should take a chance on an applicant? Well here are three steps I sometime take::

• Ask for first and last months’ rent upfront, plus one month’s deposit. This does three things for you. First, the applicant will have to cough up three months’ rent upfront before he moves in. If the applicant can do this it is an indicator that he’s not living paycheck to paycheck, a good sign that he will be responsible. Secondly, it mitigates your risk by ensuring the final month is paid. Lastly, that final month’s rent sits in your bank account collecting interest (or, better, is out in the market working for you) for the entire time the tenant resides in the property. I write the lease to state that the last month’s rent paid upfront will be credited to the final month that the tenant resides in the property.  PROs:  will scare off bad/risky applicants.  CONs:  may eliminate some good applicants as well. 
• Shorten the term. Write a lease with a short term; four months or six months. Agree to renew if the tenant pays each month on time; you can put this in writing in the contract if you wish. If there is a problem you’re still going to suffer, but you wont’ have a deadbeat sitting in your property with a contractual right to stick around for an entire year.  PROs:  limits the period you’re at risk.  CONs: no financial benefit to the landlord, who is still stuck with evicting the tenant if he doesn’t work out. 
• Charge a higher rent. This doesn’t do much for you in the risk mitigation category, but if you’ve trust yourself as a judge of character and you’re willing to rent to an applicant that other landlords have turned away, you should get compensated for the extra risk you’re assuming.  PROs:  higher return on the property, a good thing.  CONs: doesn’t lower your risk.

Smart landlords use these strategies in combination. Increase the rent and offer a shorter term. Offer a shorter term w/ first and last month paid upfront (great risk mitigation).

Source: http://www.equityscout.com/real-estate-investors-and-tenants

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I’ve often stated on this blog that real estate is an endeavor that rests largely on the investor’s ability to build and maintain relationships: with buyers, sellers, real estate professionals, tenants, neighbors, and a host of other stakeholders.

The keys to managing relationships are of course numerous and complex. There is one that we often overlook, however: the contract.

Robert Frost said that “good fences make good neighbors”. The same can be said for a well written contract. Clear, honest communication is one of the things that helps build and maintain relationships, and there’s nothing like putting your intentions down on paper if you want to expose potential future rifts and conflicts.

I just entered into a contract with my Realtor to manage a multi-family property that I bought with her assistance. This is an agent that I’ve worked with for years and we’ve developed a healthy, symbiotic relationship based on trust and mutual benefit. We do a lot of things off the cuff (just get it done and we’ll settle later) just because it helps us to stay flexible and get things done. However, that’s not how I wanted to handle this particular arrangement.

In my opinion there are a couple important things to remember about contracts.

1) Sweat the details and address the hard issues head on. By spelling things out you make your intent clear. Your goal is to write a contract in which there is very little latitude for interpretation. The process of writing the contract can do wonders in terms of partner alignment. In my opinion, the definition of a good contract is one that sign and then stick in a file and never look at again.

2) One size doesn’t necessarily fit all. You’ll often start with a standard contract, say for property management or residential lease. Don’t be afraid to adapt or modify to suit your unique situation. For example – what I need from a property manager differs fairly significantly from the service that most full service property managers offer (I’ll write about this in a future post) so I’ve tailored our agreement appropriately.

For critical agreements (like joint investment partnerships, etc.) it’s always important to get counsel from a qualified lawyer (which I’m not). But some of this stuff you can do yourself. There are great references on the web that have contract templates. A new one is the Microsoft reference which has all sorts of contract templates from FindLaw.com, including a Property Management contract .

Source: http://www.equityscout.com/contracts-and-real-estate-investors

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My First P.D.James novel: Innocent Blood

 I have been collecting quietly PD James novels for a long time, but time and other books took priority. So finally I read my first PD James novel.

 I decided Innocent Blood would be my first read. PD James is an amazing writer. This is not just a Murder Mystery that I was accustomed to reading.  What I found fascinating and in a strange way it was interesting, that I learned to like characters that I should have despised rather than like.

 This is a story of revenge, atonement, forgiveness and at the same time a physiological thriller.  This book addresses the issues of adoption, families by blood lines and a lot more. This book is not for the faint at heart. Now I understand why PD James has such a large following, she writers much deeper than what I have been accustomed from a murder mystery novel. She is a philosopher, a psychologist and a detective all at the same time. After reading this book I needed something easier to read…

Nevertheless well worth reading and I have no regrets.

If you are a consumer who is considering buying or selling a home, investment real estate, vacation homes, or beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Culver City, Marina Del Rey, Venice or Malibu. Feel Free to give me a call 310.486.1002or emails me at homes@endrebarath.com or visit one of my websites at http://www.endrebarath.comYourPet Friendly Realtor. I contribute a portion of my commission to Local Animal Rescue Organizations.

Source: http://activerain.com/blogsview/3031941/my-first-p-d-james-novel-innocent-blood

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