What is a “Timeless Question in Real Estate”? “Is this a good time to buy?”

If you have been a Realtor one year or a hundred years like me. The reoccurring question comes up from “First Time Buyers”: Is this a good time to buy? Normally the “Used car salesmen mentality” kicks in to too many Real Estate Sales Associates, “It is always a good time to buy” answer. Now to the Professionals i.e.: Realtors real research goes in to the answer.

 Questions get bombarded to the potential client: Why do you want to buy? What do you want to accomplish? What is your short term objective? What is your long term objective? What are you paying for rent now? How much are you comfortable paying per month? What is your dream home? The questions go fast and furious. How is your credit? How much do you have saved up? What is your comfort level? Do your tastes conform to your budget? Are you willing to compromise and where?

Once the Realtor has the answers, then an intelligent answer can be given: Yes it is a good time to buy, since interest rates are at a 60 year low, prices in the Greater Los Angeles area are at 2003 prices. Since I am a Beverly Hills Realtor I see that homes that are selling for $1.3million in Beverly Hills are usually “teardowns”. My question comes in: Do you want to have a move in ready home? Or are you willing to spend $200,000 or more to make it comfortable to your life style?

OK I have to put this out; I do not care if your budget is at the low end or at the high end. Generally you will not find the “perfect home no matter what your budget is. Truly” a good example is Candy Spelling’s home, as most of you know was listed for $150million in Beverly Hills,CA. She sold it for a bit less to Petra Ecclestone, for a mere $85 million. The important point here is what did she do(Petra that is)? She had to spend money on making it to her taste, Period! So I do not care if you are buying a home for $150,000 or $150 million the answer is the same. Is it a good value to you? Yes, you will have to make compromises.  There is no perfect home; hence you need to be realistic where you are willing to compromise. Is it location or is it condition or is it size? Again I could go on and on, the bottom line is “compromise” you must.

 So you ask what the benefit is. The answer is easy: That is the fun of owning your own home. The landlord is you; hence no one can tell you where you can put that Flat Screen TV or that painting, and you are the owner. Freedom to choose your colors, where to put nails on the wall …. I can go on and on.

With that said is it a good time to buy? The answer is clear to me. Sellers are willing to negotiate, prices are down to 2003 in the greater Los Angeles area, and interest rates are at an all time low 60 years ago prices. So if you need a Realtor who will give you the straight answers. All you have to do is e-mail me with your questions.

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 at 310.486.1002 email me at homes@endrebarath.com or visit one of my websites at http://www.endrebarath.com Your Pet Friendly Realtor. I contribute a portion of my commission to Local Animal Rescue Organizations.

Source: http://activerain.com/blogsview/2653620/what-is-a-timeless-question-in-real-estate-is-this-a-good-time-to-buy-

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I picked this up from the guys over at Selsius.  Tired of automated directory hell?  Don’t care how to get instructions in Spanish, or that the menu has changed recently?  This service is a universal secret decoder ring for getting straight to a human being. 

Source: http://www.equityscout.com/escape-computer-phone-prompt-hell

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The new headlines catch phase is “Robo Signer”. These robo signers have been signing foreclosure documents at a rate of up to 1 document per minute. That’s 5,000 – 10,000 per month. Everyone knows that it is not physically possible for these robo signers to have read every document. That is the reason everyone is calling for a moratorium on foreclosures. Or is it?

If everyone was upset with the fact that these robo signers were not reading all the documents, then why wasn’t everyone upset that congress has passed health care and over a trillion dollars in stimulus programs while all along admitting that no one could possible read all of it before voting on it. So ask yourself, are they really upset that the robo signers didn’t read the documents. If you are honest with yourself, then the answer would have to be no.

So what is the real reason everyone wants a moratorium on foreclosures. Politics… In 3 weeks there is a major midterm election and this could be one of the most historic elections in our country. The politicians on both sides of the isle are looking for something to blame and point fingers at to make themselves look like they care and that all our problems are the banks. 

In reality, these so called robo signers have whole departments of people to create the documents and make sure that everything is correct before giving them to the robo signer for their signatures. This is how all business works. This is how congress and the president pass bills.

Now to be fair, there are reports of fraudulent mortgage documents on the banks part, but these isolated incidents are rare and need to be dealt with. For those few homeowners who were victims of falsified documents, they should end up with their houses free and clear. However, that should not cause the banks to free all foreclosures for the remaining 99% of foreclosures that were done correctly.

Source: http://www.mikejacka.com/Blog/post/2010/10/17/Should-there-be-a-Moratorium-on-Foreclosures.aspx

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• No comps: I’m buying an updated four-unit complex in the trendy Montrose section of Houston.  There basically are two types of properties that you find in the comps: teardowns and new construction.  The building that I’m buying was originally built in the ‘30s, but has been updated with new wood floors, central air conditioning, a raised outdoor deck, and a number of amenities that make it a rare building.  Which means: there’s nothing to compare it to. Which in turn means: you have to trust your numbers because there’s really not much of a “market”. 
• Time pressures: The sale side of the 1031 was triggered by my selling the property to the tenant who I was renting to.  This was fortuitous in that I avoided vacancy, sales commissions, and all of the other hassles and expenses that are associated w/ marketing a property, but it also happened a bit quicker than I had expected – which meant that  I needed to be expeditious in my search in order to identify a replacement property within the IRS mandated 45 day window. But nothing like a deadline to keep you from getting paralyzed by the analysis. 
• Challenging negotiation: The goal of a negotiation is to efficiently reach a wise agreement in an ethical way.  This is easies when there is some alignment of the goals of the two parties and they negotiate directly. Well in this case the “alignment” part was potentially there. But the other elements weren’t. First: both the sellers and I were using agents – that in itself injects two additional degrees of separation into the negotiation, which makes effective communication more difficult. Add to this the fact that the seller was not a single individual; the property was owned by a group of three physicians who had teamed up on the investment, and who, based on their disjointed and confusing responses, had conflicting agendas. Messy. Once I get this deal tied up I’ll write about how some of the Getting to Yes principles helped keep the deal from stalling. 

But…looks like we’re close to the finish line on this deal.  And appropriately, the deal is set to close on Friday the 13^th.  Not that I’m superstitious or anything…

Source: http://www.equityscout.com/four-unit-multi-family-investment

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Well we’re a few weeks beyond Hurricane Ike, and our collective attention has turned from tropical storms to financial ones – a topic that I’ll write about shortly. 

Most of Houston is back to normal.  Among the properties that I own we suffered a few downed fences and an uprooted tree or two, along with a tenant who appears to have disappeared and abandoned her lease (I’ll write about that as well).  All and all I’ve been pretty lucky – and thanks to those of you who sent your best wishes. 

But take a look at the JPMorganChase tower in Downtown Houston.  Looks like they’ve cornered the local plywood market. 

Source: http://www.equityscout.com/jpmorganchase-as-if-they-needed-more-problems

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One economic indicator that I consult from time to time is the Global Insight quarterly study on housing prices in America. Here’s an interesting conclusion from the report: of the 330 regional markets surveyed, Houston is the most undervalued.

The Global Insight uses a number of factors in determining the theoretical price equilibrium level for each market, to include tax rates, population density, income levels, plus a somewhat nebulous “desirability factor”. So, as with all economic studies there is some art mixed in with the science, but nonetheless I find this study to be an useful data point when thinking about the relative valuation of markets.

The fact that Houston is ranked as the most undervalued market is interesting in light of the underlying economic factors and the disparity between the market’s current reactions with how it behaved in the past. Nowadays when we think about real estate bubbles we immediately think of California, Las Vegas, Florida, and other regional markets that have grabbed headlines with their flying property values over the past several years. But we forget that the poster child for real estate market collapses was Houston in the mid-to-late eighties.

Texans were knee deep in irrational exuberance long before Alan Greenspan coined the term. When the Gulf States kicked off the Arab oil embargo in response to Western support for Israel in the Yom Kippur War, the resulting spike in oil prices fueled investments in the oil industry. This, in turn, pushed property values to unsustainable heights.  Everyone wanted their own Southfork Ranch. 

Fast forward to the early years of the 21st century. Two rounds of armed conflict in the Gulf, rising demand and tightening supply have again sent oil prices into the stratosphere; and I’d argue that this time around the increases have more fundamental sustainability than in years past. Money is flowing into operational oil centers like Texas and Louisiana. But, the real estate market hasn’t responded. Yet.

The graph below shows the Department of Energy refiner acquisition cost of imported oil. 

Will property values in Houston and other economic centers for energy go up? In the short term, perhaps not. Economic malaise and a jittery credit market will help to continue to keep a lid on the prices, but I love the fact that the downside risk in undervalued markets is relatively low. Currently, investors in some markets need to plop down a 40% down payment in order to get into an property that generates breakeven month-to-month cashflow. Getting into an undervalued one where 5% does the trick feels pretty prudent.

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

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I sponsored another Micro Loan to a woman in Ecuador through Kiva.org – Pay It Forward

I love working with Kiva.org.  It’s a GREAT site that lets you provide small, $25 micro-loans to impoverished people around the world who are trying to start or grow their own small businesses.

You, along with a number of other people, provide a small loan as a group to select individuals, and the loan gets repaid and back into your account to lend out again!

The loan and repayments are supervised by individual financial organizations throughout those particular areas of the world.

I’ve been working with Kiva.org for about 4 years now, and have provided dozens of micro loans, and have a 100% re-payment rate with no defaults.

I tend to choose women in different countries to lend the money to, mostly because they do not have as much opportunity as men due to the disparagement of women in many countries.

Anyway, my assistant Lea and I work together on choosing candidates.

This week we chose Rosa from Ecuador because she is a hardworking young single mom that works hard in order to take care of her young daughter. Rosa works long hours to provide for her little one. Which we as parents know that is not an easy job, but certainly well worth it!

For more information on Rosa please visit the link:

http://www.kiva.org/lend/294144

Source: http://activerain.com/blogsview/2294450/i-sponsored-another-micro-loan-to-a-woman-in-ecuador-through-kiva-org-pay-it-forward

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I’m not an electronic gadget guy (I didn’t run out and get an iPhone) but I am a fan of well made mechanical things. I’ll probably be the last guy shooting film while the world around me goes digital; I love my Leica rangefinder – the feel of those hand-assembled German gears pulling the film though the camera’s perfectly engineered sprockets.

But things like this are expensive, so they’re an occasional indulgence. When I glance down at my wrist I see my daily watch: the venerable Casio W-201. Date, time, alarm, stopwatch, water resistant to 50 meters. Accurate to fifteen seconds per month, and the battery lasts ten years without changing.

And the best part is that it costs about fourteen bucks at Wal-Mart.

So if I make a big windfall profit on my next sale how is it going to change my life? Well, not much, actually. I’m happy with the watch I have right now and buying a newer, more expensive one isn’t going to make me happier. This is a good proxy for my life in general – or at least the philosophy that I aspire to live by. Being happy with the here-and-now helps me greatly in trying to be good at what I do.  As a real estate investor it gives me the patience to do good long-term deals that build wealth, and the courage the take prudent risks when the right opportunity arises.

So for now I’m sticking with my plastic watch. And as an added bonus: whether I’m pushing a broom or swinging a golf club it’s so light I don’t notice it’s there!

Source: http://www.equityscout.com/what-s-on-my-wrist

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I’m getting calls from a company called Blue Moon Capital. Google them and you’ll find the website.  Annoyingly enough, they have been posting comments on my blog advertising their service – a practice that I’ve requested that they cease.

The premise of the company is that they identify investment possibilities for you, and for a $5,000 fee they’ll provide the investor with title and a bridge loan, then refinance at an 80% LTV. Their main pitch is that they’re offering you, the investor, “20% equity built-in as a head start.”

The details of how they propose to accomplish this are hazy. I’m a smart enough guy, but over the course of a couple of unsolicited phone calls and a few emails I haven’t really figured it out. Here’s their financing overview from their website:

There’s an interesting footnote to the right side of the diagram: “Depending on your loan structure, Blue Moon cannot guarantee no money down at refinance.”  Which to me means that it’s likelly that you’ll have to pony up 20% of the purchase price in order to get that 20% built-in equity.  Plus the $5k fee upfront.

Well I haven’t done exhaustive due diligence on this company, but I do know that chasing a something-for-nothing strategy is a sucker’s game – especially when the opportunity shows up via a cold call. Remember what your mom told you about deals that look too good to be true.

Source: http://www.equityscout.com/new-zero-down-player

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Marina Del Rey, CA Condominium Market Report for the month of December 2011

As we closed this challenging year in Real Estate and in the overall Economy, I am truly glad we can start a New Year. So let?s review, we had the fear of a double dip recession, European crisis in Italy, Greece, Portugal to name a few. Then we had the Japanese Tsunami and the various other catastrophes around the world. All this has impacted the housing market. Let?s keep in mind that the debt crisis at home and in Europe will continue to linger on in 2012. Ironically this volatile economic environment will push investors into the Real Estate Market. I anticipate this migration to the ?safety? of ?Real Estate Investments? in the coming year of 2012.

The good news Fannie Mae & Freddie Mac will continue to guarantee new mortgages on the conforming loans, what I call the ?fuel? of the real estate recovery. The other great news is that nearly all of the economic data that was released in the 4^th Quarter of 2011 point to improvements, which is a recipe for a stronger housing market activity! THE BEST NEWS: consumer confidence has improved, which translates to increase in spending in all areas, including housing.

Now with that said let?s look how the Real Estate activity fared for the month of December.

There were 247 Active listings on the Market waiting for buyer in Westwood-Century City. There were 24 Properties Accepting Backup Offers and 2 on Hold (an indication of Short Sale) and there were 24 Properties Pending waiting for Escrow to Close. There were 43 Sold Condominiums for the month of December in Westwood ? Century City.  I would like to let everyone know, that in the past five days I have seen a great deal of activity in all price points, hence the delay of this report. I anticipate a very strong and much improved 2012.

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 at310.486.1002 email me athomes@endrebarath.comor visit one of my websites athttp://www.endrebarath.comYour Pet Friendly Realtor. I contribute a portion of my commission to Local Animal Rescue Organizations.

Source: http://activerain.com/blogsview/2699761/marina-del-rey-ca-condominium-market-report-for-the-month-of-december-2011

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