Tips and Advice on Real Estate Investing

Metro Vancouver home sales plunged 45.2% in July

2010-08-05T14:56:00.000-07:00

Edited by Tanya Chu

The Real Estate Board of Greater Vancouver (REBGV) reported August 4that the number of residential property sales in Metro Vancouver slid 45.2% last month compared with July 2009.

The REBGV counted 2,255 sales in July 2010 compared with 4,114 sales in the same month a year ago.

Real estate wisdom has it that when sales get sluggish, prices start to fall. And, according to REBGV president Jake Moldowan, that is exactly what is happening.

“With the pace of home sales and listings easing off in our market, we’ve begun to see a levelling of home prices from the record highs seen in the spring, creating greater affordability,” he said. “Activity in today’s marketplace is clearly trending in favour of buyers.”

There is, however, a tighter supply of available properties.

The number of properties listed for sale in Metro Vancouver has been trending downward since spring, with 4,138 new listings in July compared with April’s peak of 7,648.

New listings for detached, attached and apartment properties in Metro Vancouver on the Multiple Listing Service declined 17.9% in July 2010 compared with July 2009, when 5,041 properties were listed for sale.

This is good news for real estate investors as this dip may finally mean we are finally following the US in slumping housing prices. For those who are new homebuyers or real estate investors looking for cash flow properties, hopefully in a few more months, we can enter the market and swoop up some superb investment deals!

Vancouver Real Estate Market Is Going Down

2010-04-30T10:47:00.000-07:00

Click here for the article from Canadian Real Estate Association on how the Vancouver Real Estate market has finally reached its peak and now has no where to go but DOWN!

http://www.theprovince.com/business/fp/Housing+have+peaked/2911893/story.html

Over 50% of Phoenix's Homes are Currently Owned By Investors

2010-04-26T00:56:00.001-07:00

Read this very interesting article in Arizona Republic to learn how over 50% of homes in Phoenix are currently held by investors, and how 40% of the homes for sale are owned by owners underwater...

anadians in Phoenix

2010-04-20T11:28:00.000-07:00

Arizona Realtors song may be ‘O Canada!’

By Ben Ruoti, Special to The Sun (edited by Tanya Chu)

During the first quarter of 2010, Americans invaded Canada to join in the 2010 Olympic Games. Few noticed, but at the same time Canada was invading Arizona, to buy real estate!

Canadians represented 5 percent of all real estate sold in Maricopa County and 13 percent of all condos. That is even more than the number of Californians buying property here. And best of all, 80 percent of the Canadians paid cash. These figures can be verified through MLS and Tom Ruff of the Cromford Report.

The first quarter brought good things to Arizona.

Maricopa County seems to have turned the corner on foreclosures with fewer coming on the market, and the good deals are absorbed quickly. Many are going for more than the list price. A lot of buyers are investors, and of course there are folks taking advantage of the federal tax incentives. To take advantage of those credits, buyers must have their purchase under contract by April 30. In addition to investors, California buyers are coming here to take advantage of good deals and all that Arizona has to offer.

So what can we expect in the second quarter? My crystal ball is a little foggy but until the temperature hits 100 degrees, you may see Realtors walking around whistling “O Canada, O Canada”!

Only 29% of Home Sales in the US are in Distress

2010-04-19T09:06:00.001-07:00

This report came as a bit of surprise to me. I thought that at least 50% of the properties down south are selling because they're bank owned or in foreclosure. That, apparently, is not the case.

According to this “Distressed Home Sellers Report” released by First American CoreLogic just this month, only 29% of home sales are distressed properties.

What this tells me is that there're lots of room for negotiations DIRECTLY with home owners - a much easier negotiation process than with the banks!

Commercial Developments in Phoenix When the City was Flying High - The Boom and Bust of Commercial Real Estate in Phoenix

2010-03-30T15:56:00.000-07:00

Read this article to get a good overview of the Boom and Bust Cycle of Commercial Real Estate in Phoenix. It highlights some of the commercial developments between 2000-2008.

Saturday, March 27, 2010

Commercial real estate market winds up decade of extremesPhoenix Business Journal - by Jan Buchholz

In 1989, Barron’s, a national financial magazine, predicted the end of a boom era in Phoenix, with the collapse of both the commercial and residential real estate markets.

The article cited office vacancies soaring beyond 20 percent and foreclosures accounting for 42 percent of all residential sales. It noted that the bubble of speculative land brokerage was about to burst, and that financial institutions were in distress. It also discussed a decline in population growth and a stagnating economic base far too dependent on construction and housing.

“For all its pretension to major city status, Phoenix remains a locale arrested in development between brash adolescence and adulthood. The city can be both charming and exasperating,” the article read. “But the one constant that binds virtually everyone in the area is a unshakable faith in the future expansion of Phoenix. Yet that growth is, by no means, assured.”

Worse than deja vu
Years pass, but some things stay the same. Today, office vacancies in the Valley are again over 20 percent. Industrial vacancies are at 17 percent, and the retail market is struggling after an overabundance of shopping properties were delivered in 2007 and 2008.

Foreclosures on Phoenix homes still generate dismal headlines, and many touted commercial developments are either on hold or scrapped.

Real estate pundits continue to decry the area’s ongoing reliance on population growth and real estate to fuel its economic engine, and they’re calling for change.

Phoenix has muddled through the past 20 years fairly spectacularly. Still, local economists, real estate brokers and economic developers warn that radical change is warranted during this severe recession.

“Historically, the state and especially the greater Phoenix area have outperformed the nation in both expansion and recession periods,” said John Lenio, economist for CB Richard Ellis’ economic incentives group in Phoenix. “This time is different. Arizona ranks last among all states for job retention at the present time. Unfortunately, this may be the new norm without some serious efforts to diversity our economic base.”

At a crossroads
Chris Mackay, economic development director for the city of Chandler, agrees that this cycle is different.

“We can’t live on construction. We can’t live on population growth. We’re at a crossroads and facing competition from other states,” he said.

Despite the contention that Phoenix needs a new economic steering mechanism, Craig Henig, senior managing director of CBRE in Phoenix, has watched troubled real estate times transform into the best of times. He remembers the last major downturn during the savings and loan crisis around 1990, which hit Arizona particularly hard. And he remembers the Barron’s article well.

“It poured a lot of gas onto the fire, but it also created a lot of opportunity. Buildings were bought well below replacement costs, and people migrated here like crazy,” Henig said.

In fact, Barron’s pessimistic prognostication did not come to pass. For sure, the economy was sluggish for several years, but Phoenix forged ahead.

During the 1990s, new communities were delivered in every direction. Phoenix Sky Harbor International Airport was expanded and remodeled. Two major sports facilities were completed: Chase Field and U.S. Airways Center.

New highways were built, including State Route 51 and Loop 101, which was completed in 2002. Loop 202, which encircles the east Valley, was built between 2005 and 2009. Both opened up new employment centers and resulted in numerous office and industrial projects being developed.

“The opening of the 101 opened up the Deer Valley corridor,” said Keith Lambeth, senior vice president of Colliers International in Phoenix. “Deer Valley was not a submarket, and overnight it became a vibrant scene.”

Thus, during the 1990s, telecom companies, insurance firms such as USAA and investment firms such as Charles Schwab opened and expanded operations here.

“Phoenix was embraced because we don’t have disasters here,” said Charles Miscio, another Colliers senior vice president.

Those kinds of companies don’t want to deal with hurricanes, earthquakes and other acts of God, he said. They prefer nice climates without surprises.

Downtown Phoenix transforms
With the suburbs opening up to more commercial development, business and political forces launched a concerted effort to create a vibrant downtown.

In 2000, the 23-story Collier Center was built by developer Opus West in partnership with Barron Collier Co. Bank of America became the anchor tenant.

In 2001, the 20-story Phelps Dodge tower, now called One Central Avenue, was built as headquarters for the mining giant that later merged with Freeport-McMoRan Copper & Gold Inc.

In 2003, the city of Phoenix began development of the Phoenix Bioscience Campus at Seventh and Van Buren streets. That campus now includes the Translational Genomics Research Institute, International Genomics Consortium, the University of Arizona College of Medicine–Phoenix in partnership with Arizona State University, the UA College of Pharmacy, Northern Arizona University’s allied health program and Phoenix Union Bioscience High School. The ASU College of Nursing opened in 2009.

ASU’s downtown campus also includes the Walter Cronkite School of Journalism and Mass Communication, which opened in 2008.

Add to that the $600 million expansion of the Phoenix Convention Center and the 31-story Sheraton Phoenix Downtown Hotel, both completed in 2008, and a vibrant city is beginning to unfold.

The One Central Park East office building was completed in 2009 and will serve as the new headquarters for Freeport-

McMoRan. Several floors of that office tower, built by Mesirow Financial, are being converted into a boutique business hotel to be operated under the Westin brand.

This summer, the massive CityScape project will be delivered by Scottsdale-based RED Development. It includes an office tower and retail components that downtown has needed for years, including a drugstore and a specialty grocer. A Kimpton Hotel also will be built there.

West Valley rises
Also during the past decade, large-scale projects were delivered in Glendale. Jobing.com Arena, home of the Phoenix Coyotes hockey team, opened in December 2003. The University of Phoenix Stadium, home of the Arizona Cardinals, opened in August 2006. Neighboring those venues is Westgate City Center, which includes stores, restaurants and the Renaissance Phoenix-Glendale Hotel, which was finished just in time for the Super Bowl in January 2008.

Other significant hotel properties brought online throughout the Valley include the Westin Kierland Resort & Spa in northeast Phoenix, the JW Marriott Desert Ridge Resort & Spa in north Phoenix, the W Hotel in Scottsdale, the Wild Horse Pass Hotel & Casino in the Gila River Indian Community, and the InterContinental Montelucia Resort & Spa in Paradise Valley.

Retail options also grew significantly during the past 10 years.

Westcor, a subsidiary of Macerich Corp., continued its local retail dominance with the opening of Chandler Fashion Center in 2001 and SanTan Village in Gilbert in 2007. Another retail player also continued to make waves: Vestar Development Corp. perfected the power center concept, rolling out Tempe Marketplace in 2007 to bustling crowds.

A third local retail developer, De Rito Partners Development Inc., built Mesa Riverview in 2007 and paid $88 million for the aging Scottsdale Pavilions center on the Salt River Pima-Maricopa Indian Community, east of Scottsdale.

Although De Rito bought at the height of the real estate market, the risk and the multimillion-dollar renovations may pay off. The Arizona Diamondbacks and Colorado Rockies, in partnership with the Salt River tribe, announced last summer that a new spring training facility would be built just north of the Pavilions.

A short distance east of there, the tribe’s Talking Stick Resort & Spa will open this year.

Lake makes waves
In Tempe, the landscape has changed dramatically in 10 years. In late 1999, Tempe Town Lake was formed by creating a dam in the Salt River wash and purchasing water from the Central Arizona Project. The picturesque setting impelled development — particularly on the south shore, near downtown Tempe.

SunCor led the way with the nautical-themed Hayden Ferry Lakeside, which includes two office towers and luxury condominiums. Tower II is one of the many Class A office structures in the Valley that captured a high price when it was sold at the height of the real estate market in 2008. Sumitomo Corp. paid $92.5 million.

Other office sales of prominence include the two towers at Renaissance Square in downtown Phoenix.

What might best showcase the run-up in value might be the 2006 and 2007 sales of Chase Tower. In 2006, it sold for

$103 million. The following year, it traded for $167 million.

But true to the Valley’s long-standing reputation for luxury lodging, the biggest sales of the decade were reserved for hotel properties. In 2006, the Westin Kierland Resort & Spa sold for $392 million. That same year, the Fairmont Scottsdale Princess sold for $345 million.

The fever pitch of prices and transactions was cooling dramatically by late 2008. Large-scale developments such as the partially completed CityNorth mixed-use project in north Phoenix and the Centerpoint residential high-rises in Tempe may not be completed for some time.

Industrial boom to bust
The industrial market, once sizzling, now is a shadow of its former self. The sales pitch that the West Valley could challenge Southern California as a distribution hub has been discarded, said Don MacWilliam, a senior vice president of Colliers International.

“There was the hype in 2006, 2007 and 2008 that Phoenix was becoming a first-tier distribution hub,” MacWilliam said. “Now we’re off everybody’s radar screen. We’ve gone back to regional status.”

In the months ahead, the concern is that large commercial real estate loans will go into default, sending the local economy into yet another dizzying roller-coaster ride.

“The highs and lows of the past four to five years certainly have been the most severe in my professional experience, and probably since the Depression era,” said Don Miner, a director of law firm Fennemore Craig PC and principal of the Arizona School of Real Estate & Business.

From limbo to life
Miner sees some stability returning to the market, and said responsible lending practices must be enforced. He’s also confident that developments sitting in limbo will spring back to life.

“Over time, the market and sustainable business opportunity will take care of the projects that were not completed in the last downturn,” he said.

Mackay said she’s more optimistic, too.

“The industry has exhaled. We’re seeing a significant uptick in activity,” she said. “Buyers are starting to pull the trigger instead of just kicking tires.”

Beth Jo Zeitzer, president of ROI Properties and an expert in distressed properties, said the recession is a window of opportunity for a few.

“This market is not for the faint of heart or risk-averse investor,” Zeitzer said. “Those with laser-sharp focus, a long-term vision and patient capital will flourish in the next phase of the market.”

Even so, Lenio offers words of advice that hark back to Barron’s 1989 assessment.

“Arizona no longer can rely on sunshine and golf course to attract new business,” he said.

“If we don’t get it this time, we’re never going to get it,” Mackay said.

This story was part of the Phoenix Business Journal's annual Commercial Real Estate magazine distributed with the March 26 print editio

Be careful of mortgage and real estate frauds!

2010-03-30T15:08:00.000-07:00

Here is a list of some of the more common mortgage and real estate frauds happening down in the states! Be careful when you're doing business and always do your due diligence!!!

- Scrutinize valuation reports done by non-appraisers
- Be careful of loan modification schemes
- Don't be a victim of the "flopping" of short-sale properties:
a technique where someone gets two price opinions from brokers, giving the low one to the bank arranging a short sale of a home nearing foreclosure and the high one to a potential buyer.

Such techniques can net an unscrupulous buyer tens of thousands of dollars while shorting the bank and homeowner and taking advantage of the subsequent buyer.

- "One of the most common cases of real estate fraud I've seen are forgeries by spouses and family members," says Bert Rush, senior vice president of Santa Ana, Calif.-based First American Title Insurance Co. "A husband may use his girlfriend--who is posing as a wife and has intercepted the wife's credit cards as identification--to take over a piece of land."

To read more: http://www.forbes.com/2003/03/13/cx_bs_0314home.html

If Morgan Stanley is Going into Phoenix, What's Stopping You?

2010-03-30T14:27:00.000-07:00

Below is a Press Release on Morgan Stanley Investments raising $370 million to go into Phoenix to buy properties. This, I believe, will be a very lucrative investment for everyone! Particularly if you don't have enough capital to buy the properties yourself in cash.

March 22, 2010, 8:03 a.m. EDT

Morgan Stanley Alternative Investment Partners Raises $370 Million for Phoenix Global Real Estate Secondaries Fund

NEW YORK, Mar 22, 2010 (BUSINESS WIRE) -- Morgan Stanley Investment Management (MSIM) today announced that Morgan Stanley Alternative Investment Partners (AIP) raised $370 million in commitments for Morgan Stanley AIP Phoenix Global Real Estate Secondaries 2009 LP (Phoenix), a fund dedicated to acquiring secondary interests in opportunistic and value-added private equity real estate funds. The capital raised exceeded AIP's initial $250 million target.

"This successful fund-raising effort against a challenging market backdrop is a testament to the strength of our investment team and our differentiated investment strategy and process," said Jacques Chappuis, Head of AIP. "We believe that demand for comprehensive expertise in real estate investing combined with the team's fiduciary background, direct real estate transactional experience and unique access to a substantial flow of secondaries transactions contributed to the strong response we saw from institutional investors globally."

The objective of Phoenix is to target off-market secondary opportunities in private equity real estate funds that have a sustainable strategy for generating superior returns across real estate cycles, an emphasis on strong real estate fundamentals and in-depth knowledge of local markets.

"For the first time ever, investors in private equity real estate funds are selling significant interests in the secondary market, and as a result, we are finding tremendous opportunities to acquire high quality assets at attractive valuations," said Joseph D. Stecher, Head and Chief Investment Officer of AIP Real Estate Fund of Funds. "We are focusing on best-in-class small- to mid-size fund managers globally as we seek to capitalize on several distinct advantages of investing in the secondary market, including the ability to avoid start-up costs and fees, accelerate investment programs and shorten time for realization, and effectively value underlying asset portfolios."

AIP's Real Estate Fund of Funds team, based in New York and London, has a wide range of hands-on experience in private equity real estate investing, property acquisition, development and management, real estate equity and debt financing, workouts, and the real estate public equity markets.

AIP is the fund of funds division of Morgan Stanley Investment Management. AIP manages portfolios of hedge funds, private equity funds and real estate funds for some of the world's largest institutions and high net worth individuals. AIP has offices in West Conshohocken, Pennsylvania; New York; San Francisco; Atlanta; London and Hong Kong.

MSIM, together with its investment advisory affiliates, has nearly 1,000 investment professionals around the world and approximately $266 billion in assets under management or supervision as of December 31, 2009(1). By leveraging its global 'community of boutiques' structure and the strength of Morgan Stanley, MSIM strives to provide outstanding long-term investment performance, service and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide.

Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 29.21, -0.22, -0.75%) is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 37 countries. For further information about Morgan Stanley, please visit www.morganstanley.com.

SOURCE: Morgan Stanley

7 Mistakes Buyers Make and How to Avoid Them

2010-03-23T12:50:00.000-07:00

7 Mistakes Buyers Make and How to Avoid Them!

The rules of real estate have changed over the past five years. On the one hand, affordability is hovering at all-time high levels, interest rates remain low and there are a large number of homes to choose from. The bad news? Lending practices are tighter and creative financing is, well, a little less creative due to strict regulations. Still, buyer power for those looking to purchase a home is incredible, and there are some great opportunities in this market. If you’re looking to get into a home soon, be sure you know the mistakes buyers make and how to avoid them. Here are the top seven.

1) Holding onto your home. Before you begin the home search process, sell the one you’re in. Chances are its going to take longer than you expect to find a buyer because of stricter lending practices and current market conditions. The last thing you want is the added financial responsibility of carrying a second mortgage while you try to sell your home.

2) Not addressing your credit score. Stand around the real estate water cooler and you’ll hear one thing: Credit markets and lending practices are tighter than ever. This means you must have an excellent credit score to secure financing at a low interest rate. You’re allowed to pull your credit score at no cost to you. Request yours, and then take the necessary steps to fix any lingering issues that could affect your ability to secure financing.

3) Skipping the pre qualification and pre approval processes. One of the biggest mistakes buyers make is not knowing how much they can afford. By getting pre qualified AND pre approved you walk into the home search process knowing the exact amount of money you can spend. This narrows your search, lessening the time it takes to find a home that fits your individual needs. That also gives you more time to spend in the homes that could potentially be yours down the road. Pre approval also gives you big buying power during the negotiating process since sellers can’t reject your offer based on unavailable financing. The bottom line: Once you have your credit in check talk to your trusted lender to get pre qualified AND pre approved.

4) Not knowing when to stay and when to walk away. It’s worth repeating: buyers have more power than ever during the negotiating process. Consult with your realtor and view current comps. But don’t make the mistake of walking away because of a few thousand dollars. Think about it this way: a few thousand dollars could translate to less than $100 a month on your mortgage.

5) Not knowing the total costs involved. Some buyers, especially first-timers, aren't entirely aware of the costs associated with buying a home. These include: closing costs, title insurance and lawyer fees as well as ongoing costs such as property taxes, homeowners association dues, utilities and yard maintenance. When you first begin shopping for a home, always ask your real estate agent and mortgage representative to provide you with an average amount of additional closing costs so that you can work them into your budget.

6) Signing contracts with contingencies. This is a critical mistake that could end up costing you big bucks. Thoroughly review all the “ripple affects” of signing any contracts that allow the seller to stay in the home for an extended period of time. Why? Depending on how long they stay, you run the risk of losing your interest rate. Or worse, the deal falls through the cracks and you’re back at square one: more listings. Bottom line: have your real estate agent review the contract and explain any and all contingencies so that you understand what you’re getting into.

7) Not purchasing a home protection plan. You never know what problems will arise once you purchase the home. Not protecting is a mistake and extremely costly when the problems are big. Be sure to purchase a home protection plan. This is essentially a mini insurance policy that usually lasts one year from the date of sale. It typically covers basic repairs you may encounter and can be purchased for a nominal fee. Talk to friends and agents, and ask them to give you referrals to home insurance brokers. The agents of home insurance companies will help you find the protection plan you need.

World's housing markets are mostly recovering, but the situation is patchy

2010-03-04T11:19:00.000-08:00

The world’s housing markets are (mostly) recovering, according to the Global Property Guide’s latest survey of residential property time-series. During the last quarter of 2009, house prices rose in 22 countries, of the 34 countries for which quarterly house-price statistics are available, and fell in only 11 countries.

However, if we look at year-on-year figures, 2009 has not been a happy year. During 2009, 18 countries’ housing markets experienced price declines, while only 16 countries experienced house price increases.

In other words, though the last two quarters suggest that recovery is now taking place, in most countries house prices are down on the year.

The Global Property Guide’s statistical presentation uses price-changes after inflation, giving a more realistic picture than the (more upbeat) nominal figures usually preferred by real estate agents.

Source: Various series, data descriptions and sources here

Recovery uneven - downturn continues in much of the world

Even in the limited sense described above – a Q3 and/or Q4 recovery - the present recovery is uneven. Some countries in Asia are rapidly recovering. But housing markets in some of the world’s worst-hit countries have continued to decline.

Hard-hit Lithuania and Ireland’s housing markets fell sharply during 2009 (-29.29% in Lithuania, and -11.09% in Ireland), and during 2008 (-19.22% in Lithuania, and -11.89% in Ireland). The last quarter offered no respite to either country (-5.83 in Q4 in Ireland, and -4.87% in Q4 in Lithuania).

Ireland’s latest quarterly drop of -5.83% is the worst since the Irish time-series began. Back in the boom years, Ireland enjoyed steep house price appreciations, peaking at 26% during the year to Q1 1999. Now there is still no sign of respite. The economy shrank 7.4% y-o-y to Q3 2009. Irish unemployment increased to 11.6% in 2009, from 6.4% in 2008.

Bulgaria’s housing market was badly hit during 2009 (-26.36%), and its house-price decline continued during Q4 (-2.26% on the quarter).

Slovakia is another country which experienced a steep decline during the year 2009 (-12.70%), and whose housing markets were still heading down in Q4 (-2.09%).

Spain is a similar case, added to which Spanish statistics are widely believed to understate its house-price declines. By end-2009, Spanish houses were back to their 2004 values. House prices fell 6.42% during 2009 and 1.62% during the last quarter.

Portugal’s recovery in mid 2009 proved to be short-lived. House prices were up by a meagre 0.91% in 2009. But over the last quarter of the year, house prices were down by 1.06%. Portugal, like Italy and Germany, is something of a special case, because these countries entirely missed the housing boom that swept through the world.

In Kiev, Ukraine, house prices fell 30.22% during the year and 3.67% during Q4 2009. Kiev had enormous increases during the boom years, peaking at 75% y-o-y to Q3 2005. Figures for Ukraine are in nominal terms.

Russia’s housing market has been in crisis since Q4 2008. Over the year to Q3 2009 (the latest quarter for which data is available data), house prices in Russia dropped by 19.97%.

House prices in Greece (data is for cities outside Athens) declined by 1.39% y-o-y to Q3 2009 (the latest quarter for which data is available).

Source: Various series, data descriptions and sources here

Respite from the catastrophe

The biggest price-declines in the world during this crisis have taken place in Riga, Latvia (down 50.22% in 2009, after a fall of 36.98% in 2008), and in Dubai, UAE (down 43.29% in 2009, after a surge of 42.66% in 2008).

Both Latvia and UAE are now enjoying modest recoveries, with rises of 4.61% in Q4 in Riga and 0.88% in Dubai. Dubai’s figure is stated in nominal terms because inflation-adjusted quarterly figures are unavailable.

Slow recovery in America

In the United States, house prices fell by 0.31% (seasonally-adjusted and inflation-adjusted) in Q4, or by -2.61% over the year 2009, according to the FHFA’s purchase-only index, the most authoritative US index.

This downward movement was something of a surprise. However what really matters is that the annual house price depreciation was less during the year to this quarter, than in the year to each of the previous four quarters – i.e., the direction of change has been increasingly positive.

The seasonally-adjusted Case-Shiller index rose by a meagre 0.14% during the last quarter of 2009, and fell 3.87% during the entire year of 2009. But again, this was in the context of an overall improvement in momentum, as measured by y-o-y figure as taken each quarter, so that the Case-Shiller index also shows an improving situation in the US.

Canada experienced a house price decline of 2.23% during the year to end-2009. However, the house price index stopped falling in September 2009, so recovery is in progress.

Much of Latin America is experiencing a house price boom, but, with the partial exception of Colombia and Argentina, Latin American countries publish no house-price data.

Some booms in the Middle East

Israel’s house prices have been rising strongly ever since Q4 2008. During 2009, prices rose 15.52%, the highest increase in 10 years. Israel ranked third in this quarter’s survey.

Lebanon is also enjoying a house price boom, though it has not yet published figures for 2009.

Asia-Pacific continues to rally

Hong Kong and Taiwan have been Asia’s top two performers. Hong Kong’s house prices are back above pre-crisis levels. Hong Kong’s housing market experienced a quick turnaround when prices surged 20.81% during the entire year 2009, after suffering from a 15% decline in the first quarter of 2009. In Taiwan, house prices were up by 18.29% during 2009 and 4.70% during Q4. Investors’ confidence in the Taiwanese market has significantly improved, after a number of economic agreements were signed with China.

In Singapore, after a painful decline in 2008 (-9.59%), the year 2009 was a roller-coaster for the housing market. After price-falls in the first half of 2009, Singapore’s house prices surged 14.30% in Q3 2009, and 6.58% in Q4. During the entire year, house prices were up 2.12%.

The Singaporean government was quick to react against speculative buying by tightening credit rules, introducing a seller's stamp duty, and lowering the loan-to-value limit for housing loans.

Australia and New Zealand have sustained the increases they experienced during the middle of 2009. Australia’s house prices increased by 11.28% during 2009 (4.63% during Q4), while New Zealand’s increased by 4.86% (3.40% during Q4).

Recovery is coming slowly to Japan. The average price of existing condominium sales was up by a meagre 0.80% during the year to end 2009. The increase is only evident when prices are adjusted for inflation. However, there was an increase of 3.55% during Q4.

Thailand’s house prices slumped by 15.56% during 2009, but rose by 1.97% during the last quarter.

For Landlords, the Numbers Are Starting to Look Better

2010-02-24T11:46:00.000-08:00

By M.P. MCQUEEN of Wall Street Journal (Feb 20, 2010)

Home prices are falling, rents are tumbling, and apartment vacancies are rising. So why are thousands of small investors becoming landlords?

Because real-estate prices have fallen much faster than rents, the math of buying a rental has actually improved substantially in most parts of the country. Money invested in an apartment complex today typically generates annual returns of 7% to 8% right off the bat, up from less than 6% at the peak of the housing bubble in 2006.

If your property appreciates in value or rents rise, you could end up with double-digit annualized returns when you sell it. But higher returns usually come with higher risks. If you overpay for a rental property or you buy in the wrong market at the wrong time, you can lose a lot of money.

In general, landlords should pick communities where real-estate prices and rents appear to have nearly bottomed out, and jobs are stabilizing. Some of the best deals are in places like Fort Worth, Texas, or Columbus, Ohio, where prices never went wild. Markets like Las Vegas and Phoenix, both plagued by overbuilding, and Detroit, hurt by auto-industry woes, still look dicey.

But other markets like San Francisco or Chicago can still be attractive for landlords who find the right neighborhoods. Fred Bertucci, 50 years old, has been investing in small apartment properties in the Chicago suburbs since 1990. In August, he and his business partner, Kevin Moriarty, 54, bought a six-unit apartment house out of foreclosure for $280,000. It brings in about $25,000 per year in net operating income, he says, or about a 9% yield on the dollars invested. That's up from roughly a 5% yield several years ago when prices were higher, he says.

Being a landlord now isn't easy. You need good credit and plenty of cash—as much as 50% of the purchase price—because banks are still skittish about lending. You need extra cash for handling repairs and vacancies, and you must have the patience to deal with difficult renters.

If you buy an investment property, you should expect to hold it for three to five years or more. Much of the big money from quickly flipping properties already has been made, and conditions now favor long-term owners who want an investment that will throw off income and slowly gain value over time.

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Credit-Card Fees: the New Traps Intelligent Investor: High Yields Aren't Always a Good Thing Family Value: A Tough Choice: You or Your Kids The False Security of Prepaying Tuition Running With Scissors: The Carry Trade Can Be Unforgiving "It's a great time for someone who is focused on increasing his net worth, rather than doubling his money in a short period of time," says John Burns, a real estate consultant in Irvine, Calif.

Geoffrey Koblick, 55, who has been investing in residential and commercial real estate for many years, recently scooped up two apartment buildings in Northern California. He didn't buy any properties from 2003 through 2007, when "prices were too high based on the income the properties were generating," he says.

Mr. Koblick says he and his partners paid $3.3 million in May 2009 for a 23-unit building in Berkeley that generates $199,500 in net operating income, for a 6% return. They are upgrading the property, and Mr. Koblick expects its value to increase dramatically over the next seven to 10 years, when he hopes to sell it. Since they bought the building with a 33% down payment, he projects the partners will end up with an annualized return of 15%.

Of course, things often don't go as planned in real estate. J.P. Botha, 33, bought a new one-bedroom condo in Manhattan for $775,000 in 2007. Property values were rising, and he figured he'd sell it for a profit. Instead, its value on completion fell more than 25%. So he rented it out. His first tenant bailed after five months when she lost her job. He had to make a price concession to find and keep a second tenant.

"I'm hemorrhaging over a grand a month," said Mr. Botha, who took out a 30-year mortgage to finance his investment. Still, he says he is taking the long view on his investment: "Once I pay off the loan I will have an income-generating property for the rest of my life."

Real estate experts forecast metro Phoenix market recovery in 2014

2010-02-24T11:25:00.000-08:00

Friday, February 19, 2010

Real estate experts forecast metro Phoenix market recovery in 2014

Phoenix Business Journal - by Jan Buchholz

The Arizona real estate market will recover slowly and approach modest levels of normalcy — but not until 2014. That was the assessment of a group of experts who gathered Friday morning for “Gloom to Zoom,” a seminar sponsored by Rose Law Group and held at the Arizona Biltmore Resort & Hotel.

Phoenix economist Elliott Pollack and housing analyst R.L. Brown believe the market has bottomed out, as far as residential product is concerned, but the industry likely will float along the bottom for months, if not years.

“Things are not going to recover overnight,” Brown said.

He cites two ongoing concerns: Lack of consumer confidence and job growth.

“The mood is down. People are scared. Everybody knows someone who is unemployed or underemployed,” Brown said.

Pollack, who also is a real estate investor, pointed to a dearth of jobs and nil population growth creating an economic stalement that won’t loosen for years.

“The ugly truth is that no one knows for certain” when jobs will be created and population growth return, Pollack said.

His buzz phrase for the presentation was, “Essentially no one is showing up here, and Arizona is in trouble.”

Though the introductory remarks were somewhat somber, the mood and assessment improved.

Nate Nathan, a land broker and principal of Nathan & Associates Inc.,, was exuberant.

“I’m zoom,” Nathan said.

Land parcels have traded at a rapid clip and in the past six months lots have tripled in value, especially in the southeast Valley.

“There is more money than deals,” Nathan said.”You’ve got 18 to 20 months to play the land game and then it’s over.”

Bill Lund, managing partner of Canyon Oaks Estates LP and chairman of WSL Associates, said the key to his firms’ investments has been to shun debt.

“We do not like debt. For years we were land purchasers but now we’re looking for income producing properties with a sale/leaseback component,” Lund said.

David Larcher, executive vice president of retail developer Vestar Development Co., sees glimmers of light in that market. Vestar’s properties include Tempe Marketplace, Crossroads Towne Center in Chandler/Gilbert and Desert Ridge Marketplace in Phoenix. Sales have increased at their shopping centers for the past three months, but that increase is not close to what people were spending for retail three years ago.

Arizona’s reputation has been so damaged among national retailers that Arizona has been blacklisted, Larcher said.

Mark Winkleman, former Arizona land commissioner land and chief operating officer for ML Partners, said there are many lessons to be learned from the Valley’s battered real estate market. Since last summer Winkleman has been sorting through and administering loans for Mortgages Ltd., the local commercial lender that was forced into Chapter 11 bankruptcy protection in 2008. ML Partners is the entity created by the U.S. Bankruptcy Court to collect on an estimated $800 million in commercial loans, many for bold local projects that have stalled or failed.

Winkleman said many of those projects are in foreclosure, near foreclosure or coming to market for sale.

Chateau on Central, the multimillion-dollar Victorian brownstone that is partially built at Central Avenue and Palm Lane, will be sold Feb. 25. Some bids are in the range of $8 million, about the same price that each unit was projected to sell for in 2006 and 2007.

Winkleman described the Mortgages Ltd. situation as a “train wreck.” He said a number of both borrowers and investors lost almost everything as a result of the company’s investment strategy that changed rapidly during the mid-2000s after years of taking a conservative approach.

“I’ve seen people who should have never had another care in life be completely wiped out,” Winkleman said.

Interview of John Ray, Largest Buyer of Foreclosed Home in Phoenix

2010-02-24T09:41:00.000-08:00

http://www.davidoverfield.com/441/interview-with-john-ray-largest-buyer-of-foreclosed-homes-in-phoenix-area/

Government Pumping $60M Into Phoenix to Fight Foreclosure

2010-01-26T16:12:00.001-08:00

The US Government has just pumped another $60 million to help deal with the foreclosure crisis in Phoenix. This is on top of the $39.5 million already given to the city. The money will help be given to buyers to help boost curb appeal, make their homes more energy efficient, and receive housing counselling. They also get a 3-Year home guarantee. It's no wonder the market is in a frenzy. With all these incentives put on by the government, it's almost better off walking away from your upside mortgage and go buy a new house, that is, provided your credit score hasn't been ruined.

For more on this, please check out

http://ktar.com/?nid=6&sid=1256732

Process of Foreclosure Due to Property Tax Lien

2010-01-26T13:33:00.000-08:00

Download Mark Manoil's PDF "What to do if you receive a 30-Day Notice of Intent to Foreclosure an Arizona Property Tax-Lien" here.

http://members.cox.net/manoil/objects/whattodo.pdf

Mark Manoil is a property-tax lawyer from the firm that deals with the largest numbers of foreclosures in Phoenix Metro - Tiffany & Bosco.

Tax-Lien Auctions - Another Way to Invest in Real Estate

2010-01-26T12:24:00.000-08:00

The latest real estate investment craze in the US is tax-lien auction due to unpaid property taxes. All the bidding process happens online, a guide is available at bidmaricopa.com. The process involves bidding on property-tax liens (which consists of delinquent taxes, accrued interest, and costs associated with the auction/sale) where investment returns can be as high as 16 percent annually.

In 2009, the average winning bid was 8.7%, which is better return than most investments in the stock market.

Lien investors pay off other property owners' past-due taxes, receive a decent rate of return for a few years, then hope to make the money back when the property is sold or the taxpayer ultimately pays it off with interest and penalties.

In 2009, an average lien was $1,784 - when the lien is paid off.

To read more about what is a tax-lien auction and sale, click here.

This year in Phoenix Metro, property-tax-lien auction is geared up to be the largest ever in volume and value.

Rampant home foreclosure, plummeting property values, and inactive commercial buildings caused a dramatic spike in unpaid property taxes during the 2008 tax year. In fact, it was recorded as one of the largest sale of property-tax liens on record, an estimated $70 million worth of unpaid taxes on about 42,000 homes and other properties.

The amount of unpaid taxes involved constitutes as 1.6% of the county's total 2008 property-tax levy.

In 2009, Maricopa County (Phoenix Metro) involved the sale of 33,500 available parcels valued at $47.5 million.

On Feb. 8, those unpaid taxes will be sold to investors hoping to earn interest on them until the property owners pay up.

And if the home owner does not pay the overdue tax within 3 years, the investor has the right to collect the property and transfer the title into his/her name.

But as with any investments, there are risks.

If a property doesn't sell for enough money to pay off all county tax liens, which can exist for multiple years and be held by multiple investors.

Investors who don't do their research could find themselves holding a lien on property that has been deemed an environmental hazard, and the investor could be liable for financing the cleanup.

To get the latest info on tax-lien auctions, read the advice of Mark Manoil, a Phoenix lawyer who specializes in property-tax issues and tax-lien investing.

Phoenix Real Estate - Has It Hit Bottom?

2010-01-20T14:28:00.000-08:00

According to a report from Arizona State University released mid Jan 2010, lenders in 2009 foreclosed on about 41,000 single-family detached homes in Maricopa County. That's more foreclosures than the Valley has seen during any previous year on record, accounting for more than 35 percent of all existing-home transactions, the report said.

Its author, Jay Butler, associate professor of real estate at the W.P. Carey School of Business, said overall home-resale volume in 2009 rivaled that of the real-estate boom's peak year of 2005, but for all the wrong reasons.

"That (2005 sales volume) was ... due to rising home values and a type of euphoria about real-estate investment," Butler said. "Now we're seeing a totally different type of activity driven by foreclosures."

Foreclosures were up in December, at 4,060, compared with the previous month's total of 2,985, and the median single-family home price decreased to $140,000 from $143,000 in November, according to the ASU report.

Home resales increased, with 5,740 sales in December compared with 5,350 sales the previous month.

Compared with December 2008, foreclosures increased about 31 percent, the median resale price was down 4 percent, and resale volume was up 33 percent.

As much as this hype is driven by investors thinking that the market has hit "bottom" and that prices have no where to go up but from here, it is important to still wait and see. Because as we understand from real estate cycles, we must not buy when everyone else is buying. As long as the "buying" frenzy persists, it is unlikely that we've really seen the bottom of this market. It is wise to wait until real owners occupy these homes before really going in for the last dibs.

Small Improvements to Help Sell Your Home Profitably and FAST

2010-01-11T12:42:00.001-08:00

Have you ever wondered what are some of the things you could do to improve your home to increase the value of your house upon re-sale?

Despite recent improvements in the housing market, home sellers interested in selling quickly for the maximum dollar amount should consider making some small improvements to positively affect the bottom line and decrease time on the market. A home that appears well cared for with recent updates will stand out from the competition. Updates do not have to be a $50,000 newly renovated kitchen. Think small and spend your money wisely.

Start with the outside by checking curb appeal. A house that looks well tended on the outside will draw buyers in!

On the inside, start at the ceiling and work your way down. Repair or replace broken doorknobs, light switches, etc. If you cannot remember when a room was last painted, consider painting, being sure to choose a neutral color. If your furniture is old or mismatched, consider slipcovers and some new, inexpensive throw pillows. If you have dirty carpets, rent a rug cleaner and get busy cleaning the carpets. This is especially important if you have pets or rooms with high foot traffic because making your house look and smell its best will enable buyers to see themselves living there.

Remove clutter and depersonalize because you do not want to distract your potential buyers with personal items. Since you are selling your house and moving, you might as well start packing up personal collections, photographs, and other items for your move to a new home. Packing now will make the stressful time of moving day a little easier by having most of your things ready to go into the moving truck. If this is an option, consider moving out and renting elsewhere. This will free up your home for multiple viewings at any time of the day, without you being disturbed.

Turn on the lights! When your house is being shown, do not forget to turn on every light in the house, and open all blinds and curtains to make your home appear light-filled and inviting. Remember, you are selling space—make your entire home look as spacious as possible by placing your overflowing stored items from over-packed closets, basements, and sheds in a storage rental unit. Buyers will be impressed with how much storage space your house has if everything is not falling out of the closet as the door is opened.

There is really no need to break the bank to get your house sold quickly. A few well chosen updates as well as removing clutter by packing up personal items will work wonders in making your home appear more spacious and appeali

2010 REAL ESTATE TRENDS

2010-01-11T12:30:00.000-08:00

2010 REAL ESTATE TRENDS PART ONE

According to Keller Williams, the top 10 trends in real estate for 2010 are as follows:

10. Cash Rules
9. Quicker Short Sales
8. Complicated Appraisal Rules
7. Inconsistent Construction Market
6. Increasing Mortgage rates
5. Continued Tight Lending Standards
4. Some Stabilizing Home Values
3. More Foreclosures in 2010
2. More Buyers in 2010
1. A Continued Buyer’s Market

We’ll start with numbers 10 and 9, and work our way backward.

10. Cash rules everything around you – especially when you are trying to buy a foreclosed property. So, if you are looking for a bargain, be ready to pay for it up front and quickly. If you aren’t ready, you can bet someone else is, and they will walk away owning your prized property. With most foreclosed properties being bank (or lender) owned, the motivation is to sell fast rather than high as most banks don’t want to own properties. Buyer competition can be frenzied at best, and to be in the winning circle, you have to be ready with the necessary cash!

9. The Short Sale has a reputation for being difficult; slow and often exasperating, and failing in the end. The property owner is willing to sell for a lesser amount than is owed, but often the lender is not. Sometimes it can take months before the lender voices unwillingness to sell low. Again, however, the bank (or lender) is not in the real-estate market, and the attitude toward short sales is changing. 2010 will find each side attempting to restructure and simplify the short sale and it will become a strong trend in pre foreclosure selling!

Join us next week for part two of our five part series.

More Foreclosures to Come Onto the Market

2010-01-04T12:45:00.000-08:00

First American CoreLogic released data on Thursday indicating that 1.7 million REO’s and potential foreclosures hadn’t hit the market by the end of the third quarter.

Based on the current sales pace, it’ll take 3.3 months to get rid of all of these homes. (Compare that with last year’s 1.1 million homes.)

This is not information you’ll find in official measures of unsold inventory. The official number of unsold homes currently on the market stands at 3.8 million as of the end of September. That alone could take 7.8 months to sell. Add to that other unseen and marketed properties and you get 5.5 million
units.

All this indicates that while officially numbers are down towards the end of this year the actual impact these foreclosures will have on the housing market will be much greater than experts predict.

This "shadow inventory" may make its way on to the market in huge bundles, or in steady, manageable streams. Either way, its impact on the market will be immense and provide some ripe opportunities for the timely investor.

House Flipping in Phoenix Back in Fashion

2009-12-29T22:25:00.000-08:00

In Phoenix, flipping homes are starting to make a comeback. As banks release more foreclosed homes into the market place at below market value, and as investors with cold hard cash pick them up at auctions, they are able to flip the homes in the market place for market value. This is particularly the case with once million dollar homes. Some of the homes that used to sell at more than a million in 2005-2007 can now be picked up at auction for $300-500 000. The catch is, the buyer must have cash to play. Then, these homes are sold on MLS for $600-800 000, still a great deal for those who can afford these multi-million dollar homes.

Here is a specific example of a house in such a situation that is currently on the market place: http://www.trulia.com/property/1050979790-755-E-Windmere-Dr-Phoenix-AZ-85048. If this mansion on 755 E Windmere Drive Phoenix, AZ does not sell soon, it will go into foreclosure and can probably be picked up at the auction for $800 000.

To read more on this spectacle, check out this site.

Phoenix Real Estate Inventory at a Glance

2009-12-22T16:10:00.000-08:00

Phoenix Real Estate Inventory at a Glance

Since mid December 2009, there are 22,136 single-family detached homes for sale in the Phoenix real estate market. Of these, 43% of the active listings are distressed sales of some sort.

We currently have 3.91 months of inventory overall, 1.44 months of bank owned inventory, 5.07 months of short sale inventory and 5.88 months of “traditional” - non-bank owned, non-short sale inventory.

Last year at this time, there were 38,765 single family detached homes for sale in the Phoenix real estate market and 10.35 months of inventory. There were 8,669 bank owned properties on the market and just shy of five months of bank owned inventory.

Add another five thousand homes to the market to equalize the bank owned side of things compared to last year, and we’re still sitting at under five months of inventory overall - still half of where things were a year ago.

So what does all this mean?

Limited bank owned inventory has helped slow the market’s descent to some degree. The bank going forward, will be cautious with how they price their homes for sale, most likely AT market value (neither too high or too low).

Interest in the Phoenix market remains high despite what's happening in the economy (i.e. high unemployment rate for Phoenix's standards).

The combination of low prices, low interest rates, favorable exchange rates, and the homebuyer’s tax credit is keeping the market moving even during what traditionally is the slowest time of year.

There were 3,745 total sales from mid-November to mid-December last year. The year before that, there were 2,361.

Phoenix will be bound for a slow and steady recovery. However, the housing prices have reached bottom and most likely would not go any lower than it is now.

What To Do After Your Offer Gets Accepted

2009-12-21T09:43:00.001-08:00

By Tanya Chu

For many first time investment property buyers, they often don't know what to do after their offer gets accepted. To help you in your final process, follow these steps that I use:

1) Get your realtor to go out to the property within 72 hours to take LOTS of pictures of the property, both inside and out. They should also take pictures of each of the 4 houses to the right, and each of the 4 houses to the left of your property. Plus, the 9 across the street from yours.

2) Get at least 3 property managers from different companies to go out to the property and take pictures as well. They should each produce you with a report of all the income and expenses they anticipate you'd be accountable for when you possess the house.

3) Once the pictures come in, you want to take a closer look at the property and decide if there will be lots of repairs required.

4) From the property managers' reports, you want to recrunch your numbers and your numeric analysis.

5) Re-do your insurance quote. Get at least 3 from different brokers.

6) Have your realtor do a Broker Price Opinion (BPO) if he's qualified to get an "accuraate" appraised value. Recrunch your numbers and twik your analysis.

7) Get an appraisal. Recrunch your numbers and recalculate cashflow.

8) Get an home inspection done. If the amount in repairs is reasonable, then proceed. Again, recrunch your numbers and recalculate cashflow.

9) Renegotiate the sales price by filling out an addendum.

10) Once the Seller agrees with you on a price and you're happy with the proposal. The sale is complete. Wire your money into Seller's escrow agent.

Voila! Congratulations on your home purchase!!!

ASU Economist Predicts More Phoenix Area Foreclosures

2009-12-21T09:37:00.000-08:00

Arizona State University's Economist Jay Butler announced Dec 10 in the Phoenix Business Journal that "Another wave of foreclosures could hit the already downtrodden Phoenix housing market in early 2010". He says, "I think the foreclosure rate will pick up after the first of the year because of the continued weak job market and frustration on the part of homeowners struggling to pay their mortgages.”

Watch the interview clip here.

#1 Most Common Mistake New Real Estate Investors Make

2009-12-01T22:28:00.000-08:00

The #1 Most Common Mistake New Real Estate Investors Make is Buying and Selling Real Estate at the Wrong Real Estate Cycle.

Many newbie real estate investors bought their first home when the market was high and most likely paid a premium on their property. This usually occurs and is quite commonplace because they get caught up in the hype. And when emotions are high and there is a real estate frenzy about town to "BUY REAL ESTATE!", intelligence is LOW.

Our "thrill" phase (see Real Estate Emotions graph) is best characterized 2005/2006 when Vancouver's Pre-Sale condos were selling out in less than an hour and when the line-ups for these homes were a mile long! However, after they've paid the price on their "investment" property, they realized "Oops! What have I done?! I paid WAY too much!" and now their properties (if they did not liquidate them already) are now negatively cashflowing.

Understanding the real estate cycles is really KEY to not making those junior mistakes. You must OBSERVE what is going on in the city of your choice (whether it be Vancouver, Phoenix, Las Vegas:
Is there active construction?
Is the city currently experiencing over supply?
Are rents coming down?
Are property values plummeting?
Are development projects being halted? (like in Vancouver)
What are the emotions of the people/of the headlines?

Knowing the answers to these questions will help you gage where we are on the real estate cycle. And from there, you can make your buying and decisions with more accuracy and better timing!

Latest Real Estate Market News

2009-11-08T14:41:00.000-08:00

I found Mario Romero, a seasoned Phoenix realtor's website, while researching for local experts. I'm not sure how good Romero's service is but his website is full of great info on market news, common questions by investors and home buyers (i.e. Has the market hit bottom yet?; Should I rent or buy?; etc.)

Have a look!

http://www.talktomario.com/ext_real-estate_eNews.asp

To Buy or Not to Buy? That is the question...

2009-10-27T14:27:00.001-07:00

Though I've already posted a blog on this topic months ago, here's another take on this often wondered issue from Vancouver Magazine:

http://www.vanmag.com/Real_Estate/To_Buy_Or_Not_To_Buy

Phoenix Real Estate Prices Slumping

2009-10-21T11:22:00.000-07:00

Too Many Homes on Market Hurt Prices
Source: Fox News - Phoenix
Published : Tuesday, 20 Oct 2009, 10:25 PM MDT

Watch the Newscast ONLINE

PHOENIX - Some experts are saying that the housing slump is far from over. They say home prices have not yet hit rock bottom -- by as much as 20 percent. It's because there's too much inventory.

For every "For Sale" sign, there's a handful more nearby that have received a notice of default for its owners being behind on the mortgage.

An aerial map of homes in the Maricopa County is dotted with homes whose owners are behind on their mortgage.

While not all of them will be foreclosed, many will end up on auction or in a short sale.

Realtor Andrew Wheeler says people don't see it coming.

"The banks have been holding back the REO's, and not letting them out of the legal system onto the auction market. Therefore they're just sitting on them. They've been piling up. We are cruising somewhere into 100,000 units," says Wheeler.

"Every house that I look at that is for sale that is bank-owned is surrounded by several numerous trustee sales that are coming up around the corner."

Banks are apparently holding on to homes because an influx of homes coming onto the market could force prices to plummet. Wheeler says that may be a very real risk come next spring.

22 Tips on How to Not Pay Too Much for Your Home

2009-10-21T10:56:00.000-07:00

22 Tips on How to Not Pay Too Much for Your Home

Whether you are buying your first home, or your fifth, the process of buying a home is a detailed, time-consuming venture. At the same time, it’s an emotional period laden with difficult choices. You want to ensure that the home you purchase meets your family’s needs now, and in the future.

Each of these decisions often involves money. When you consider all that money represents, you’ll want to ensure that you don’t pay too much. This article helps you become a savvy buyer, by pointing out some of the pitfalls inherent in the home-buying process. These include such things as knowing what you want before you begin shopping, taking your time to shop, choosing the right realtor, and remaining objective while viewing potential homes. With this information, you’ll be closer to finding your ideal home.

1. Before you shop, develop a needs vs. wants list
Everyone has a picture of an ideal home. This would include all the features you not only need, but have long desired. However, when it comes time to buying a home, the desires cost more. While it’s nice to think about having a beautifully landscaped backyard, or a solarium, perhaps even some built-in appliances, these are usually considered luxury items, which can add considerably to the price of your home.

That’s why it’s a good idea to develop a needs and wants lists. With this list, begin with items you really need like adequate space, garage and number of bedrooms. For most people, basic needs should be considered first. After that, you could consider additional desires, if you can manage these benefits financially.

With such a list in your hands, you’re less likely to be caught up in the excitement of the pursuit. You’ll have a good idea of what you want, within you price range, and if you can afford those additional items.

2. Get pre-approved prior to shopping
Visit your financial or lending institution prior to home buying. Quickly, you’ll know the amount of mortgage you’ll receive. Be sure to get a mortgage commitment in writing. Most importantly, you’ll tell sellers that you are a serious prospect. Depending upon market conditions, a seller may lean towards an unconditional offer. You’ll have less negotiating power if you have to wait for mortgage approval.

Banks and financial institutions have developed many programs especially for home buyers, be that first-time buyers or those with equity in their homes. When you review your needs and objectives with a lending officer, you’ll be one step closer to purchasing your home.

3. Choose your winning team
Buying a home is a complicated process, with many people involved. From choosing the right mortgage, to finding a home inspector, to viewing available properties, there are many steps involved for even the hardiest person. With a professional realtor on your side, you’ll have access to these services, already in place, and highly recommended. A good agent has the knowledge and experience developed from many years of helping both buyers and sellers. During this time they have developed a network of people, from lenders, lawyers, home inspectors and movers, to assist both home buyers and sellers.

4. Communicate clearly with your Realtor
Spending time with your Realtor will reap huge dividends. When you have a clear picture of the type of home you’re looking for, your Realtor can come closer to finding the home you want. You won’t waste time looking at homes that don’t match your needs.

5. It’s still true – location, location, location
You’ve heard it so many times, that it’s probably starting to sound like a broken record. That’s because it’s true! A home is not a stand alone item. Rather the value of a home is greatly affected by the surrounding homes. Don’t let your emotions determine your purchase. Think resale. The desirability and resale value of your home depends largely on location more than any other factor. People want a desirable community that includes character, quality of schools, access to work, major transportation arteries, recreational facilities, etc.

On your viewing trips, take a careful look and ask the following questions: How does this home compare to others in the neighborhood? Are yards fenced? Are there many children playing in the streets? Are front and backyards and the exterior of the homes properly maintained?

Walk around the neighborhood and get a feel for the people living in the area. You may want to speak with a few neighbors to get their comments. If you like the community, carefully examine the home you like. Generally speaking, extremely large homes surrounded by smaller homes tend to appreciate less than a large home among other large homes. Alternatively, the smallest home in the neighborhood tends to stand out by the other homes on the block. Sometimes, it could take a bit longer to sell a smaller home, as some people are reluctant to pay extra for the neighborhood.
Additional factors that affect the property value of a home include traffic, sounds, smells, zoning bylaws. Be objective. Don’t rely too heavily on your emotions. Be sure you are completely satisfied with the neighborhood. If you choose a neighborhood with problems, you likely won’t get as much as you hoped when it comes time to sell.

6. Use your Realtors’ knowledge of the community
Your Realtor is trained in all aspects of Real Estate, including understanding supply and demand, economics and the neighborhoods of the city in which they practice. As they regularly view homes as they are placed on the market, they are at the heartbeat of knowledge and information about housing trends and prices. They can save you time and money, by narrowing your prospects to only those that meet your requirements. It is a very time consuming process to view every home available that meets your needs. A professional Realtor can do much of the work for you, by reviewing your needs, reviewing the properties and then hopefully, advising you of a potential match. A comprehensive knowledge of the available homes in your neighborhood is one of your Realtor’s strongest assets. With the aid of computerized systems, a Realtor is notified within hours when a home becomes available.

7. Check your emotions, and shop with your head
When people purchase a home on emotion, without an objective view of the property, problems may develop later. Shopping for a home is an emotional process. It could be costly. Using your head, along with asking for an objective opinion (from your Realtor) could help you avoid costly errors.

8. Pay attention to “red flags”
When evaluating a home, be sure you know the difference between acceptable and unacceptable problems. Cosmetic items like peeling paint, worn carpeting, unattractive wallpaper can be easily remedied. You could use these as negotiating items, as there will be costs involved in updating the home.

Major problems, however, are clearly “red flags.” Look for items such as major foundation cracks, water damage, outdated electrical systems, and inadequate plumbing. These items could cost you dearly in the future.

9. Hiring a home inspector is a wise investment
A home inspection is an inexpensive way to gain peace of mind, and guard your pocket book. A proper inspection will cover all areas of the house including foundation, electrical, heating, plumbing, floors, walls, ceilings, attic, roof, siding and trim, porches, patios, decks, garage and drainage. A professional inspector can give you an objective view of the property, with a written report, indicating the present condition and items that will need repair.

10. Be cautious with fixer uppers
Some people may be inclined towards purchasing a home that needs some work. This could be a challenge and an opportunity to make money. Sometimes, a fixer-upper can be purchased below market value, and sufficient repairs made to bring it to a good sale condition with a profit realized. However not all fixer uppers will bring in the profits you might expect. It depends upon the price of the home, the amount of repairs needed and the market conditions at the time of sale. If the home is not priced low enough, you may not recover your investment of time, trouble and money. Before you purchase what looks like a quick way to profit, carefully consider the condition of the home and ALL the repairs that need to be made. Get several estimates. Complete a comprehensive budget. Also consult with your Realtor. He or she can give you an idea of what you can reasonably, expect to recover when the home is put back on the market.

11. Consider your future needs
Take a look at your lifestyle now and in the future. Will you need extra space for a home office, a child, or perhaps a child moving back home? Perhaps it may be easier and less expensive if you purchase a home that can meet these needs now, rather than moving up to a larger home a few years later.

12. Proceed quickly
When you’re ready to buy, move fairly quickly. That’s because good properties usually sell fast. This is especially true when there is a shortage of homes available. However, when you work with a Realtor, you have access to the most current technology. As part of the MLS network, a Realtor has access to properties within hours of when they are listed. Technology works to your advantage. When a Realtor knows your needs, they will notify you when properties that meet your criteria become available. Many Realtors now have personalized websites which allow you to sign on a client, and receive notification of these listings via email. You save time and effort, and you can view only those homes that come closest to your needs.

13. Clarify relationships
In any real estate transaction, be very clear about who is working for whom, and what the relationship represents. Many people believe that the agent they are working with automatically represents them and their interests. Yet, without specific disclosures this is not true. Unless otherwise stated, the agent represents the seller in transactions for the sale of a home. This agent, as part of his or her fiduciary duty, must ensure his loyalty protects the seller’s position throughout the entire process.

14. Ask for a written CMA
A Comparative Market Analysis (CMA) is an analysis of comparable homes in the neighborhood. It shows you the sale prices of comparable homes in the neighborhood, along with asking prices of other homes in the area currently on the market. A Realtor can request this report for any home and neighborhood. Ask for this report in writing. With this valuable document, you’ll have the appropriate evidence for either a too-high asking price, or one that is a bargain.

15. Investigate the seller’s situation
Knowing about the seller’s reasons for moving could work to your advantage during negotiations. For instance, a seller who has been transferred to another city, may be more motivated to sell rather than someone who is still shopping for a new home. A vacant house, a house that has been on the market for several months and reduced in price, could also be indications of a motivated seller.

16. Keep personal information to yourself
Conversely, information could be used to your detriment. Information about your mortgage, size of down payment, move-in deadline, or circumstances for buying, could be negotiating factors. While you want your Realtor to know these details, don’t reveal any of this information to the seller.

17. During negotiations, keep your emotions in tact
In certain situations, emotion could cost you money. If you let the seller know how interested you are in the property, this might be seen as a financial opportunity. Recognizing that you are highly motivated, you could be an easier target for a higher price. If you absolutely love the home, keep it to yourself. This is a definite advantage of working with a professional Realtor. Trained to be non-emotional, he or she can ensure you get the best price.

18. Ensure the deal is right before you sign
While you definitely want to move quickly, once you’ve made the decision to purchase, you don’t want to cave in to pressure for a quick close. Someone who is trying to pressure you into buying a home, is doing so for a reason. This could involve money, or a multitude of other reasons.

19. Exercise your negotiating skills
Even if you prefer not to haggle, it’s worth it, especially when it’s your home and your future. Most people expect to haggle over the price. That’s often why the price is set a bit higher than the actual selling price. There is always room for negotiation. If you want to get the best home possible for the least amount of money, then negotiation is the only way to get a good deal.

20. Avoid bidding wars
In some cases, the seller’s Realtor may use scare tactics to rush the sale or increase the price. Falling for this trap could cost you money. If there is another buyer, or some other reason this pressure is being applied, whoever wins also loses because they overpay. If there really isn’t another buyer, then it’s likely that the deal with fall through.

21. Insist on a written disclosure of all known defects
Legally, sellers must disclose all known material defects of a property. Ask for this in writing. Also be sure to consider the ramifications of these defects. Will it be costly down the road? Are they “serious” defects?

22. Be aware of your hidden costs
There is more to a home than simply the mortgage. You will be responsible for other items including mortgage insurance, appraisal fees, legal fees, inspection fees, transfer taxes, title insurance, inspections, etc. Your Realtor can give you a good idea of the costs associated with buying a home that are beyond the final negotiated price of your home.

By. Dave Richards

Owning a Home is Still Better Than Renting

2009-10-13T09:18:00.000-07:00

Home sweet home investment? Sure, in the long run

CHICAGO — For all the doom and gloom about the housing market, it still generally pays to own a home.

That might be a tough case to make right now to the 16 million homeowners who owe more on their mortgage than their house is worth. But history suggests the American Dream is a pretty safe bet.

Homes have appreciated by an average of 4 percent a year since World War II. They act as hedges against inflation and bestow significant tax benefits. Real estate is a leveraged investment; a 10 percent down payment produces a 1,000 percent return if the price of a home merely doubles.

Plus there are intangibles: Owning a home provides a sense of independence, security and community. And you get to live in your investment. You can't do that with a stock.

Of course, historical trends don't pay the mortgage. People who wade in and out of the housing market too often, or who buy at the wrong time or price and need to sell quickly, can get burned.

But if you own for a decade or more, price appreciation usually overcomes even bad slumps.

Tony and Liz Iacobelli, who are far under water on the home they bought in the Phoenix suburb of Buckeye three years ago, aren't panicking. They owe about $177,000 on their mortgage on a house worth only $132,000, which is about 40 percent of what they paid.

"Houses generally go up in price, and this one will again, too," says Tony, 51, a retired New York City policeman.

Several booms and busts have occurred in the modern era of housing, which began when 30-year loans became widely available after World War II. This bust has been severe: Nationally, home prices are down an average 30 percent from their peak in 2006.

The collapse of the housing market may have put an end to the notion of using a home as a speculative investment akin to a hot stock. And that may not be a bad thing, economists say.

"People should recognize that value comes from a lot of other things besides a possible return on the investment," says Joel Naroff, chief economist at Naroff Economic Advisors.

Economists say home prices have risen by about half a percent a year above inflation, or roughly 4 percent, since the 1940s. That number, which is based on the median price of homes sold each year, was inflated a little by baby boomers starting families and building bigger houses. Since the National Association of Realtors began compiling statistics in 1968, the median sales price has climbed 6 percent annually, from $20,100 that year to $195,200 this past August.

In the late 1990s, home values started growing like stocks. For the next five years, they appreciated at 8 to 9 percent a year, or about 5 percentage points ahead of inflation.

You won't find many skeptics among people who bought homes in the '90s and still live in them. Their homes may be worth tens of thousands of dollars less than at the peak, but they're still frequently worth twice what the buyers paid. For example, a house in Ewing, N.J., that sold for $160,000 for in 1996 was worth about $410,000 three years ago. It's still worth $375,000 today.

Home buyer beware, however: Price declines do occur with some regularity. Besides the 30 percent price meltdown of the last three years, the Standard & Poor's/Case-Shiller index of home prices in 10 cities shows four declines lasting six months or more since 1990. The declines averaged 3 percent.

And whether large or small, a drop can be followed by several years of flat prices. After the 1990-1991 recession ended a housing boom, prices didn't start increasing nationally until 1997. So homeowners who buy at the wrong time can go years without gains.

The hefty costs of homeownership also can work against people who aren't committed to settling in for a while. Transaction costs — home inspections, sales commission, fees, transfer taxes — run thousands of dollars every time you buy or sell.

And most people overestimate the tax benefits. They don't realize the standard deduction they would get if they didn't itemize might be nearly as great as their housing deduction, says Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

For example, a homeowner with a $200,000 mortgage might pay $11,000 a year in interest and $2,000 in property taxes. That's $13,000 — a healthy deduction, but just $2,100 more than the standard deduction of $10,900 for those married filing jointly.

And as a homeowner pays less each month toward interest and more toward principal, the deduction will shrink — until it falls below the standard deduction, which rises to keep up with inflation, Baker says.

Of course, paying principal builds equity and is the equivalent of a forced savings plan, which can finance big expenses such as college tuition. In the long run, many people fund their retirement partly by selling a home they've owned for many years and moving into smaller, cheaper housing.

Another reason to buy a house is it's a leveraged investment; you pay only a fraction of the price with your own money, which can produce an enormous return. If you make a down payment of 10 percent on a $200,000 house and it doubles in value to $400,000, your $20,000 investment has grown to $220,000, a return of 1,000 percent. That's like buying a $40 stock and watching it soar to $440.

But how can you tell in the short run whether it's better to buy or rent? There's a way to gauge how expensive homes are — the price-to-rent ratio.

The ratio is determined by dividing the price of a home by the annual rent that could be earned from it. Since 1986, the ratio has averaged 9. Anything above that suggests it may be better to rent, depending on your area.

After soaring to 15 at the end of 2005 — above 20 in some areas — the nationwide ratio has dropped back to 10, according to Economy.com data, making ownership far more attractive.

Prospective buyers can do the price-to-rent calculation themselves. For example, if you can purchase a home for $180,000 but can rent a similar one for $18,000 a year ($1,500 a month), your price-to-rent ratio would be 10, making the buying price reasonable and close to average. And you would have the tax benefits and equity that you don't get with renting.

It would be nice to say home prices rise reliably and steadily — and a few years ago they seemed to. But that "sure thing" is no longer.

Short-term prospects are cloudy. Many economists expect home prices to keep falling through 2010 as mounting unemployment, foreclosures and a glut of unsold homes all weigh on the housing market.

Robert Shiller, a Yale University economist and co-inventor of the Case-Shiller index, says he expects home prices to be roughly flat for five years.

Yet housing has proved a good investment if you stick with it. And with prices already having fallen so far, buying now could make it an even better one.

Source:
By DAVE CARPENTER of Associated Press

Investing in Phoenix - Knowing What's Going On In the Rental Market There

2009-10-13T08:35:00.000-07:00

By Tanya Chu

As an investor, we must understand what happens with the real estate market when it crashes to protect ourselves from potential losses.

In Phoenix, as well as in many other US cities, when the home prices fell, so did rents. Right now, landlords are competiting for tenants and have lowered their standards (i.e. not collecting security deposits and not conducting credit checks) and rental price just so that their house doesn't sit empty. In fact, some landlords are even paying for renters' utlities, giving away ipods or flatscreen tv's, or offering a few month's worth of free rent! Tenants now have the power of choice and the ball is in their court - not a good situation for investors.

So, a word of caution, if you're investing in cities such as Phoenix, where prices are down 50% since the peak, or other cities suffering from a similar fate, be wary of where you invest. Make sure that you're picking a good neighbourhood to avoid problem renters.

For more readings on this topic, check out this article in Arizona Republic: Valley landlords face new reality.

Short Sale, Lease Options, Hard Money Lenders, Loan Modifications, and Foreclosures

2009-10-13T01:22:00.000-07:00

To read articles on Short Sale, Lease Options, Hard Money Lenders, Loan Modifications, and Foreclosures, check out this website I recently stumbled upon: http://foreclosureangel.net.

This website shares the same name as the charity organization: Foreclosure Angel Foundation - a non-profit organization that helps struggling homeowners keep their foreclosed or about-to-be foreclosed homes!

You can find more information about them at
https://foreclosureangelfoundation.com/Home/tabid/36/Default.aspx

Where are all the old people going?

2009-10-07T12:46:00.000-07:00

By Tanya Chu

If you're trying to figure out which city is good to invest in, one important factor to consider is demographics. I like to see where all the old people are going for retirement because I believe the babyboomers will dictate the market. Though many boomers have been affected by the market, some still have money to spend and enjoy. On CNN Money.com and Forbes, they often publish lists based on statistics of where they think are best places to retire. This doesn't necessarily mean that this is where the old people will go, but it's a good place to start your research and investigation.

Check out CNN's "25 Best Places to Retire."

How to Find a Foreclosure House

2009-10-07T12:34:00.000-07:00

Buying a foreclosure home often is appealing to house hunters trying to stretch their dollars. But finding a good one can be a challenge.

"The vast majority of the banks don't want us to advertise [foreclosure homes] as 'bank-owned' because it comes with a negative connotation," says Ryan Melvin, co-owner of More Realty Group in Las Vegas.

That means there's no sign on the front lawn indicating that it's a bank-owned house. And a buyer probably won't find a property advertised as a foreclosure in marketing materials, says Mr. Melvin, who specializes in real-estate owned properties, or REOs, those that have been reclaimed by a bank, typically after an unsuccessful foreclosure auction.

Where to Find Them
So, if you're considering the purchase of a home that's owned by a bank, you'll need to do some homework.

One option: Go straight to the bank. Banks' Web sites will list properties that the financial institution has reclaimed. To find a list, do a Web search for "REO" and the name of the lender. Contact information for the property's listing agents is usually provided for each entry.

For a fee, other sites will hunt down properties for you. RealtyTrac.com, which helps people find foreclosure and pre-foreclosure properties, charges $49.95 a month, after a free seven-day trial. The company also recently launched BankHomesDirect.com, which charges $19.95 per month and lets people search just for REOs.

Foreclosures.com charges $49.95 per month, after a free seven-day trial.

You also can enlist the help of an experienced real-estate agent. Someone who works regularly with REOs might be able to track down the properties more easily than a traditional agent. The National REO Brokers Association has a searchable database of brokers on its site, nrba.com. The REO Network, reonetwork.com, offers a free listing of real-estate agents specializing in REOs.

Get a Thorough Inspection
When shopping around for a foreclosure property, it's important to know just how much work you're in for -- and how much it's going to cost you. Foreclosure homes are in various states of disrepair; some fixes are cosmetic, while others can be extensive.

Sometimes, people set their sights on bank-owned properties "like the word 'foreclosure' equals 'good deal,' " says Mark Goldman, a mortgage broker with Cobalt Financial and a real-estate lecturer at San Diego State University. But that's not always true.

Lenders aren't held to the same disclosure requirements as sellers who have lived in the home, mainly because the lender hasn't occupied the home to notice leaks or other problems. So an inspection is crucial.

"If there are lessons out of the last couple of years, it's certainly buyer beware," says Dan Steward, president of home-inspection firm Pillar to Post, which has a U.S. headquarters in Tampa, Fla.

"We have all heard the stories of people ripping the copper pipe and wiring out. People have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall," Mr. Steward says. Some have ripped out toilets and kicked in walls or left faucets running before vacating the house, often out of anger.

While you don't need an inspector to tell you that the toilet is missing, he or she can tell you if there is damage 20 feet down the water line because of the way the toilet was ripped out, Mr. Steward says.

Other issues could pop up due to the property being vacant. Large banks will often hire a service to cut the grass, shovel the snow and winterize a home. But when homes aren't occupied, it's harder to catch small problems before they become big ones.

Come Prepared
To increase your chances of getting your offer accepted and having a quick closing process, have all paperwork and requirements in order before making an offer, says Duane Andrews, chief executive of Clear Capital, which provides valuation products for the mortgage and lending industries.

That includes having any financing approved and writing a clean offer -- not asking for minor repairs, for example.

Most bank-owned properties are sold "as is," Mr. Melvin says, so if there is something you want fixed, it's best to just factor that into the price you're offering.

But don't expect to bargain the listing price way down. Banks typically price their properties at a 20% to 30% discount to begin with, he says. If the property has been on the market for a week or two, don't expect the bank to drop the price; if the listing is older, you might have some wiggle room.

Make sure to follow directions when submitting the offer. "Most listing agents will have instructions on how we want buyers' agents to submit the offer," Mr. Melvin says. Delays can occur when instructions aren't followed.

And don't be surprised if the bank asks you to get approval from its mortgage operation. You often don't have to take the loan from their company, he says, but they may want to get a closer look at your finances to make sure you're a solid buyer.

Source:
AMY HOAK of Wall Street Journal
http://online.wsj.com/article/SB125399707660143695.html

10 Ways to Find Private Lenders for Your Real Estate Investment Business

2009-10-06T21:10:00.000-07:00

If you're considering investing in the US, or if all of your cash is currently tied up in real estate, here are 10 ways you can find private lenders to lend you money for your real estate deals.

1. Elevator Pitch: Prepare a "60 second" elevator pitch and network with everyone you know including friends, family and business associates. Spread the word you are looking for investors.

2. Join professional networking groups: You can join networking groups like BNI, Board of Trade, Soho, and Meetups. Be sure to deliver your "60 second" elevator speech at every opportunity.

3. Postcard: You can purchase lists of high net worth individuals and send a postcard inviting them to call you to get free information from you or to attend an informational seminar about your real estate investing business and private lending. You can also do a postcard drop at designated neighbourhoods to let them know of your event. This can be accomplished through Canada Post.

4. Letters: Send letters to a high net worth list as above or send it to people that have already called or emailed you from your postcards.

5. Small Local Newspaper Ads: You can place ads in small newspapers offering the reader to attend an educational seminar or request a free report.

6. Flyers: Post flyers at senior centers and areas where high net worth people attend and traffic.

7. Speeches and Presentations: Offer to give a 30 to 60 minute educational presentation about real estate investing and private lender.

8. Senior Center Newsletters or Newspapers: Advertising in senior center newsletters, newspapers or even bulletin boards can be a productive way to get potential lenders. Again, be sure to offer free information or invite people to a seminar and provide good information.

9. Law Journals: Most cities have weekly or monthly journals for the local lawyers. You may want to consider advertising in your city's journal offering to help the attorney with high net worth clients and possible better returns than they are currently getting on CD's or money markets.

10. Internet: You can spread the word through social networking sites like Twitter or Facebook. However, don't be sales pitchy - just offer educational advice and tips. People will naturally gravitate towards you once you've built trust through credibility. Soliciting for investment funds through the internet is not compliant with the Securities Commission, so you don't want to do that!

I'm Ready to Start Looking for Deals - What are the NEXT STEPS?

2009-08-13T01:22:00.000-07:00

5 Tips on How To START Looking at Deals in the US

Without looking at deals and analyzing them, you will never be able to buy ANYTHING!

1) Define where you want to invest.
2) Define your parameters. Each city is going to be slightly different in terms of the price you're looking at. And depending on your investment preference and the information you've gathered, you want to try to invest in a house that's desirable and easily rentable; unless your goal is to do a quick flip.

So here's what I would zero in on:

Condo - 2BR, 2BA
Townhouse - 2BA, 2.5BA
Single Family - 3BR, 2BA
No rehabs.
Requires light touchup or "lipstick" work. (Read my other blogs to find out what this means).

3) Search on MLS or Trulia or any other websites that contain listing information.
4) Contact a realtor in the city you're interested in investing in and get onto their distribution list.
5) Once you've found something that fits your parameters, you then want to ask for all the expenses associated with purchasing this place, and the rent you can anticipate to collect for that property. With this info, you can then calculate and see if this property positively cashflows. If it does, then make an offer!

What are some good areas to invest in IN the US?

2009-08-13T01:08:00.000-07:00

In today's Earning Passive Through Real Estate Meetup, our mentor, Dario Lorenzo, shared with us his picks for areas to invest in IN the US.

Phoenix Metro
Dallas Fort-Worth
Austin, Texas
North Carolina
Tennessee
Denver
Oklahoma

Another expert investor, Betty Jakus shared her favourites:

Saskatchewan (rich in Potash, Uranium, Oil)
St. John, New Brunswick
Newfoundland
Kitchener, ON
Markham, ON
Nova Scotia

Tax Implications for Investing In the States as a Canadian

2009-08-13T00:46:00.000-07:00

I am not an Accountant and am not giving any tax advice. But for those of you who are seeking for a general idea of what to expect in terms of taxation when investing in the States, this is what I learned today from my Meetup seminar:

When investing in the States, it is best to set up a Corporation of some sort.

If you want to be a Trader - meaning your purpose down South is to flip, then you should get a "C-Corporation" - which gives a lot of flexibility to you. There is no withholding tax on the sale of your property. You can pay yourself dividends or shares. The income is taxable, but I don't believe it gets withheld. For more information, go visit an Accountant who specializes in this...

However, if you want to invest for the LONG TERM, then you want to go with a Limited Partnership (if you plan to do joint-ventures with others). Again, this has many tax advantages.

If you're a lone wolf, investing in the States, BE AWARE that you may face withholding taxes on the SELL (10% of GROSS) of your property, and on the RENT (30%) you collect as an investor. But, if you apply for a Tax ID number, then these withholding taxes are eliminated.

As a Canadian, your Accountant must help you file your taxes here and in the US. You don't get taxed twice, but from the sounds of it, there would be a lot of paperwork to fill...

Our guest speaker recommended MacKay LLP as a great accounting firm for dealing with US Tax issues. If you happen to know other good ones (in Vancouver, BC), please send me an email / or post your recommendation on the "Comments" section. I know we'd all appreciate it!!!

As I research further, I will update this section with more accounting related info!

10 Tips and Advice on How to Invest in the US

2009-08-13T00:11:00.000-07:00

On our Aug 12, 2009 Meetup on "How to Invest in the US," I learned from the advice of Dario Lorenzo, our mentor, some tips I'd like to share with my readers.

1) Understanding Real Estate Market Cycles - Know where on the Real Estate Cycle the city of your interest is (see picture) through the news headlines and the stats (i.e. unemployment rate, immigration trends, housing inventory, etc.) you read.

2) Get a mentor that has experience in Real Estate Investing - so you can avoid costly mistakes. My mentor has 20 years of experience and I count on him to give me solid advice.

3) Analyzes After Repair Reno Costs - let's say a property is worth $100K, and the reno costed $10K. We should not be paying more than $60K for this property. Essentially, before you make any improvements to your property, or decide on how much you'd like to spend, CONSIDER: A) the AGE of the property and B) the QUALITY OF TENANTS you'd like to attract.

4) Know your MAO - Maximum Allowed Offer.

5) Stay away from rehabs. There's no need to do more than a "lipstick" job on houses these days because with the inventory available out there, you don't need to spend money and buy a fixer-upper in the States. This means, all you should be required to do is repaint the walls, maybe replace the carpets, landscaping, and maybe repurchase appliances if you're buying a foreclosed home where the appliances have been stolen.

6) Find a knowledeable realtor. He/She can help give you pointers and guide you to the right neighbourhoods to invest and provide stats regarding the city.

7) Find a reputable and licensed home inspector. With foreclosed properties, it is very important for investors to be careful. One horror story is where the previous home owner would pull out the toilet, pour concrete down the drain, and put the toilet back, concealing the permanent damage that was caused to the property. Because foreclosed properties usually have their water lines and electricity shut off, a poor inspector would not know how to test or discover these problems until it is too late!

8) Build a competent team of professionals. This team includes but is not limited to an Appraiser, Licensed Contractors/Trades People (always get at least 3 estimates), an Insurance Broker, a Leasing Agent, an Accountant, a Licensed Mortgage Broker, a reputable Title Company, and an experienced Escrow Agent (the latter two handle your Closing transaction - something that is particular in the States). They can help you obtain the information you need to do proper due diligence and research.

9) Source out a Property Management company that is not only experienced but actively manages properties in the neighbourhood you invest in. Knowledeable PMs can tell you what the going rents are in your area and know how to properly market your place to your desired tenants. You can and should also ask them for a rental survey so you can know the rent comparables in that neighbourhood, as well as read up on your competition (whether through Craigslist or local rental websites). To find good PMs, you must interview them.

10) Know the Tenancy Acts in your city/state. This allows you to better manage your Property Managers. If you violate the rules in the States, you are completely liable, and it would not be any fault of your Property Managers! So be careful!

Are You Interested in Investing in the US? - Investing Tips for Las Vegas

2009-08-05T16:06:00.000-07:00

By Tanya Chu

Las Vegas has been a very popular destination for bargain house-hunting. But is it really a city of bargains? A friend of mine went down there just this past week (first week of August 09) and said that though prices are still relatively cheap, the bidding war has begun and are driving up prices. People are paying $10K or more than listed price because of multiple offers!

When he went down to Vegas, many locals suggested to buy houses versus condos. Apparently, in Vegas, single dwellings are regarded as more valuable and favourable, considering the same 2BR 2BA house is just a few thousand dollars more in asking price than a small condo. Furthermore, houses are also easier to rent out than condos because again, the difference in rent is not much.

Getting Financing in Vegas

Down south, financing is difficult but not impossible. If you're interested in owning a condo, the bank would not finance you simply because there are some buildings where other units are being foreclosed and strata and property management fees are not being paid. The risks for the banks are higher, therefore, they are no interested in helping you with your finance.
However, if you want to purchase a single dwelling, the banks are willing to lend you 50% of the value of the house, provided your credit is stellar (680 or above). So this is definitely something to consider.

Second Wave of Foreclosures

The word is, there will be another wave of foreclosures soon to hit the market place. Obama had put in a "mortgage helper plan" asking the banks to not foreclose on people. However, this ruling has now been lifted and the banks are beginning foreclosure proceedings. We can expect that by late fall or winter, there will be more deals and inventory available to the patient investors!

Another gem to look for in the next few months would be high-end homes (aka. mansions). A few years ago, the banks were lending >$450 000 to people who wanted to purchase high-end homes, such as ones in areas like Summerlin or Rhodes Ranch, but now, the terms for these mortgages are coming up and all of these houses are no longer worth that price! Many have dropped at least 50% in value. In the States, home owners can walk from their mortgages and face no consequences, something Canadians don't have the luxury of doing. In fact, there are even some people who had refinanced back when the value was high, took the money out of their house, and now, are walking away with that cash. They take this money to invest in the houses now, under other family members' names. It's no wonder that the States is in the mess that it is in!

Where to Look

Great places to start looking in Vegas are in these numbered areas: 404 - where the houses are in great shape, but are a little expensive403 & 402 - where there are many foreclosures503 - again, expensive - but deals are available if you look hard enough.

Try to stay away from the Strip, as there are many prostitution and drugees there.Stay away from the east side as well. The trend seems to be, the further you are from the Strip, the better off you will be.

Make sure the neighbourhood you invest in has people living there! Either have someone drive by the area, or do it yourself, and make sure there're families and (nice) cars there. The last thing you want to do is to buy a place that is in the middle of a ghost town, where nobody would even want to rent there. Don't be fooled by nice houses because they can be in those neighbourhoods too!

Other Things to Keep In Mind

I think it's wise to fly down and check out the properties yourself before you make your purchase. For us Vancouverites, flights are not very expensive. Search Allegiant Air and you can find some great deals.

It is imperative that you spend the money on a good inspector who will do a thorough check with you on the property. Often, with foreclosures, there could be cement poured into the sink, and you wouldn't know.

Even though it's great to have the assistance of a realtor, if you can, it is always better to deal directly with the home owners or the bank representatives. Remember that realtors are there to make money too and even though their commission technically doesn't come out of your pockets, they have the incentive to keep the prices high. So why not talk to the home owners or bank reps yourself to negotiate on a better deal? This is definitely worth trying!

Make sure your house cashflows positively after all expenses are paid. Those who are considering benefiting from Appreciation, you'll have a few more years to wait before that happens. So don't be "hurting" while you wait for the market to turn around.

Lastly, be aware that most of the good deals are offered by the banks (though not always) and they may need some tender, love, and care before you can rent it out. So make sure you add your closing costs, reno costs, and any necessary repairs that needs to be done onto that "final" price when you analyze if your purchase is worth while!

Tax Deductible Expenses from Rental Income

2009-08-03T11:00:00.000-07:00

Posted by Tanya Chu

What expenses can you deduct if you have rental properties or receive rental income from one or two rooms in your home?

mortgage interest (not principal)
property taxes (even if it's just a fraction of your house)
utility costs
house insurance (can include tenant insurance, landlord insurance, and more)
maintenance costs
advertising
property management fees
rental losses (and if this exceeds overall income, and cannot be deducted on the current year, then it can be carried back or forward to reduce taxes for the other years)

Other more complicated expenses you can consider are:

Capital cost allowance - claimed based on the purchase price of the building, furniture and fixtures, etc. (but the government usually reclaims this deduction back when you sell your home)
Change in use (from residential to rental or vise versa) can result in a deemed dispositio

Check on CRA's - T4036 Rental Income - Includes Form T776

Link direct to the PDF
http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-08e.pdf

Link direct to CRA's website
http://www.cra-arc.gc.ca/E/pub/tg/t4036/README.html

If you know other tax dedutible expenses one can claim on their rental income, please share your tips in the Comments section!

Things to Do Before You Buy a Strata Property

2009-07-21T09:36:00.000-07:00

Posted by Tanya Chu

Review Strata Council minutes for the past 12 months or more, along with by-laws, financial statements, Annual General Meeting minutes, and engineering reports that may have been completed. Look for past problems, previous repairs, special assessments, and upcoming expenditures.
Look at the history of price increase on the Property Management / Strata Fees. Past increases may indicate future results.
Ensure a maintenance program is in place by talking to the strata manager to determine whether the building has a solid preventative maintenance program in place.
Check the contingency fund since a portion of strata owners’ monthly maintenance fees must go into a “contingency fund” to pay for extraordinary repairs, such as a new roof or exterior painting. Find out if the contingency fund is large enough to cover any upcoming expenses.
Review the Strata Property Condition Disclosure Statement which sellers are required to complete. It is a checklist about the property's condition. Buyers should carefully review it for any defects or potential problems.
Investigate the warranty program and builder’s background whether the condo is new or resale. Your realtor can find out what type of warranty the building carries, noting the limits and duration of coverage. S/he may also be able to help you obtain background information about the builder/developer of the project.
Hire a professional home inspector with proper accreditation and one who carries Errors and Omissions insurance to inspect the condition of the suite, common areas, and the overall building structure.

Five misconceptions about property taxes

2009-07-19T18:32:00.000-07:00

Posted by Tanya Chu

1. You can appeal property taxes. No. You can appeal your assessment, not your taxes. You annually receive your assessment the first week of January and must appeal by January 31.

2. An appeal will change the market value. The market value may not correlate to the assessed value. BC Assessment typically assesses properties as of the previous July 1. A REALTOR® valuing a home now – 11 months later – may find the market has changed, the home has had an addition or the street has been re-zoned, all of which affect value.

3. If you just bought a home, the previous owners are liable for taxes. No. When you buy a property you become liable for all outstanding taxes.

4. New home owners can claim the Home Owner Grant. No. New home owners cannot claim the Home Owner Grant if the seller paid the taxes or if the new home owner claimed a grant on another property.

5. You haven’t claimed your Home Owner Grant for a few years and you want to claim it all now. You’re out of luck. You can claim the grant amount only for the previous year.

Are you considering adjusting your mortgage rate?

2009-07-19T17:58:00.000-07:00

Posted by Tanya Chu

With mortgage rates being at an all time low, many people are wondering if it's a good idea to go back to their banks and adjust their current mortgage rate.

However, if you had locked yourself in at a fixed mortgage rate prior to when the market collapsed, and are now considering breaking your fixed term for a lower mortgage rate, you must realize that you may have a hefty penalty to pay.

Some mortgage contracts will ask that you pay a three month interest penalty or "interest rate differential" if you want to adjust the rate of your mortgage. That means you have to pay the bank the difference between your higher mortgage rate and today's lower rate times what you owe -- times the remaining years on your mortgage.

(Your rate minus today's rate times what you owe times years left)

For example, if your mortgage rate is six per cent and today's rate is four per cent, that two per cent difference is multiplied by what you owe -- say $300,000 times the number of years remaining. Say that was four years you'd be left with a penalty of $24,000.

(6 % minus 4% = 2% times $300,000 times four years = $24,000 penalty)

This can add up to a lot in penalty. For some, it can be a full year's worth of interest on the principle.

So before you make the switch, consider the amount of penalty you'll have to pay. Ask your banker to fully disclose this information to you. Alternatively, there are many penalty calculators online at your disposal.

Strata Headaches - Buying a Strata

2009-06-18T11:58:00.000-07:00

Posted by Tanya Chu

Chris Olson from Olson on Your Side explains the things to be aware of when you buy into a strata.

http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20080104/chris_olsen_080104/20080104/

Re-Negotiating Your Mortgage

2009-06-18T11:56:00.000-07:00

Watch Chris Olson in this CTV special:

http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20080104/chris_olsen_080104/20080104/

Should you Rent or Buy right now?

2009-06-15T22:44:00.000-07:00

http://watch.bnn.ca/#clip143317

Legal Considerations When Buying a Condo

2009-06-15T22:34:00.000-07:00

Are you thinking about foregoing your deposit for your condo? Is your condo developer delaying or canceling the project? Know your legal rights and obligations before you make a move. BNN interviews Valentine Lovekin, Partner at Lovekin Law in Toronto.

http://watch.bnn.ca/#clip143748

Should you Invest in Stocks or in Real Estate NOW?

2009-06-15T22:19:00.001-07:00

Watch this debate on BNN: http://watch.bnn.ca/#clip143764

Guest Judge: John Hrynkow, president, Canadian Home Builders Association.

Should you buy in the US now?

2009-06-15T22:05:00.000-07:00

Watch this debate on BNN with Guest Judge: Philip McKernan, real estate investor & president, Philip McKernan Inc.

http://watch.bnn.ca/#clip144168

Fixed or Variable Interest Rate?

2009-06-15T22:02:00.000-07:00

Watch the discussion on Fixed or Variable on BNN. Listen to Boris Bozic, President & Founder of Merix Financial. Merix Financial offers one of the lowest interest rates for mortgages in Canada.

http://watch.bnn.ca/#clip144597

Foreclosure Sales - Explained

2009-06-15T21:57:00.000-07:00

For those searching for less conventional means of buying a home, foreclosures may be a viable option. BNN talks to Wade Fenner, president, Foreclosures Canada Info Systems.

http://watch.bnn.ca/#clip144594

Tax Implications for Investing in the US

2009-06-15T21:55:00.000-07:00

http://watch.bnn.ca/#clip144163

Should you Rent or Buy at the Current Market?

2009-06-15T21:51:00.001-07:00

Watch this video clip for the answer:

http://www.youtube.com/watch?v=ULF-gD_suhs&feature=PlayList&p=D28CC8E745F00AED&playnext=1&playnext_from=PL&index=9

Mortgage Negotiation - Video Clip

2009-06-15T21:50:00.001-07:00

http://watch.bnn.ca/#clip144595

Surprising Rebound in Canadian Real Estate Market

2009-06-15T21:41:00.000-07:00

Despite the doom and gloom in the economy, Canada's real estate market is starting to see signs of revival, particularly in Saskatchewan, the province of potash and uranium. (See below news article) Consumers and investors seem to have regained their confidence in the market and are buying and investing.

However, keep in mind that generally, real estate sales are better in the summer anyways. And with consumers having been conservative and money-conscious since winter, they are starting to let loose and treat themselves with something good.

Sales of existing Canadian homes rebound in May

Updated: Mon Jun. 15 2009 14:17:12

The Canadian Press

OTTAWA — Resales of existing Canadian homes showed continuing improvements in in May, with both the number of transactions and the national average price on the rise, according to the Canadian Real Estate Association.

There were 49,521 existing homes sold in May, less than one per cent below the comparable month of 2008.

The national average sale price in May hit the highest monthly level on record, at $319,757, which was up four-tenths of a percentage point from the previous record in May 2008.

The real-estate association said the dollar value of sales through its members reached $11.4 billion in May, up 10 per cent from the previous month and more than 50 per cent above the low of $7.5 billion in January.

The association said the the rebound in activity was led in some of the most expensive local markets in Canada and that had the effect up pushing the national average price upward.

On a seasonally adjusted basis, the number of sales in May was eight per cent above April's and 43 per cent above the low point in January.

Although the number of resales has been rising, fewer properties have been put on the market through the Multiple Listing Service run by CREA members.

New listings fell to a seasonally adjusted 65,070 units in May, 19 per cent below the peak reached a year earlier and the lowest since December 2005.

"Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses. The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets," said CREA economyist Gregory Klump.

Real Estate Stats for Metro Vancouver - Updated June 2009

2009-05-31T22:53:00.000-07:00

Since June of last year, which the National Bank Composite House Price Index pegs as the peak of Vancouver's market, the housing prices have declined almost 12 per cent.

Between January and March, Vancouver home prices fell 6.4 per cent, with March being the ninth consecutive month of decline on the National Bank Composite House Price Index.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled 2,963 in April 2009, a decline of eight per cent from the 3,218 sales recorded in April 2008, and an increase of 31 per cent compared to last month.

Sales of detached properties declined eight per cent to 1,190 from the 1,293 detached sales recorded during the same period in 2008. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties declined 12.2 per cent from April 2008 to $675,268.

Sales of apartment properties in April 2009 declined 10.5 per cent to 1,179, compared to 1,317 sales in April 2008. The benchmark price of an apartment property declined 12.6 per cent from April 2008 to $340,203.

Attached property sales in April 2009 are down 2.3 per cent to 594, compared with the 608 sales in April 2008. The benchmark price of an attached unit decreased 9.7 per cent between April 2008 and 2009 to $431,759.

Bright spots in Greater Vancouver in April 2009 compared to April 2008:

Detached:	Vancouver West	- up 59.5 per cent (193 units sold from 121)

Attached:	Port Coquitlam	- up 69.6 per cent (39 units sold from 23)
	Richmond	- up 17.9 per cent (132 units sold from 112)
	Vancouver West	- up 46.3 per cent (98 units sold from 67)

Apartments:	North Vancouver	- up 29.2 per cent (84 units sold from 65)

Pets or No Pets in your Rental Property?

2009-05-31T17:22:00.001-07:00

I love dogs and cats. But are they good for your Rental Property?

Pets CAN cause damages up to the tens of thousands. They can scrape the walls, the doors, and the cabinets, clawing all the veneer off. The carpet can be severely scratched and left with holes. If you want to allow pets in your rental homes, it is advisable that you increase the monthly rent because the government-regulated Tenancy Board will only allow you to collect half a month's rent for Pet Damage Deposit.

Be aware that if you allows pets and damages are done, it is often VERY difficult to collect money to do the necessary repairs. At worst, you may be faced with a complete renovation.

If your rental unit is old and the carpets and walls are already worn, you could consider now allowing pets into your property because you know that in time, you will be replacing them anyways. If you allow pets, your unit can be easier to rent because of the lack of supply for pet-friendly properties.

Great Questions to Ask When Screening Potential Viewers Over the Phone

2009-05-31T16:33:00.000-07:00

Below are some questions we use when screening viewers over the phone. When we ask questions, we make them feel comfortable in telling us these answers. We want to sound welcoming, not confrontational or argumentative.

1) When are you looking to move in?
(If you're looking to rent your place out at the end of month, but they want to move in on the 15th, then you know they are shopping around. You can do a showing for them but those who want to occupy the place sooner gets priority scheduling. In other words, you will be more flexible and show to those who want to occupy for the 30th. And you will call those who want the place for the 15th once something has been set.)

(Now, if today is already the 20th and they want to move in on the 30th. It is important to ask, "So why are you moving so close to the end of the month?" Sometimes, it could be they are being evicted, in which case, they will not make good tenants. Hear their reasoning and judge accordingly.)

2) How many places have you looked at already?
(I tend like to show my places to those who have had a chance to look around. I have found that if your property is one of the first fews they are looking at, they most likely will not take it. People usually make their decision after they've seen 5-6 properties, minimum. And the likelihood of them remembering yours is slim to none. So if they tell you this is the first property they are checking out, tell them you won't be doing a showing until 2 weeks later.)

3) What is your budget for rent?

4) Who will be occupying the place?
(This is to gage how many people will be living there and if they have children, etc. I personally prefer families and adult couples, as their lives tend to be more stable and won't move around as much.)

5) What is it that you and your (spouse/roommate/etc.) do for a living?
(Find out where they work because you can judge from the proximity of their workplace to your property, how likely they will become your tenants. If they don't have a job, ask them when they're planning on getting one and what was the last job they had.)

6) How many pets do you have? or What kind of dog do you have?
(Note that you ask "HOW MANY.." and not "DO YOU HAVE any pets?". These are trick questions because tenants will pretend that they have no pets if they know you don't accept pets. Now if you do accept pets, then you can proceed to ask them "What breed...".)

7) What do you smoke? or What brand is your smoke?

8) Have you ever been evicted?

---

After they've answered all of your questions, you will decide to either book them for a viewing according to a mutually beneficial time or let them know that you will call them back with a viewing date and time.

When you have booked a time, make sure you ask them to call you one hour before showing time to CONFIRM that they can still make it. Tell them that if you don't receive a call from them, then you will assume that they are no longer interested. You can also call THEM half an hour before the appointment time or BEFORE you leave for the showing to confirm if YOU haven't heard from them. We usually do this because sometimes they forget to call.

However, you must remember this: if their phone is OFF or on VOICEMAIL when you call them, then they are NOT SERIOUS. And if they really did forget, then they will call you to reschedule.

Last bid of TIPS:

Always book as many people for the same time to give them a sense of urgency.
Always call them half an hour before the scheduled appointment time to confirm.
Be careful not to discriminate against anyone. Everyone is allowed to see the place. If an undesirable viewer happens to call on you to follow-up and you do not wish to rent to them, simply tell them that "The place has been rented out." If they call back 2 weeks later, seeing that you have re-posted your ad and they ask, "Why didn't you rent it to me?", simply declare, "We had rented it to someone but in the end, it didn't come through. If you are interested, you can come for another viewing and fill out another application form." He/She will say, "But I already filled one out." "Yes. However, we've disgarded all the applications from previous viewings because we thought we had completed the rental process. If you are still interested, please come in again and fill out a new application form."

JUST REMEMBER THIS:
If you break your own rules, you will end up wasting your time!!!

Good luck renting! =)

The Devaluing of the American Dollar

2009-05-04T23:24:00.000-07:00

Nothing direct to do with Real Estate Investing here. But we thought this would be interesting to share...

Glenn Beck from Fox News shows us how much debt the US is in and how much money the Federal Reserve has printed... Watch the entertaining Inconvenient Debt, a play on Al Gore's Inconvenient Truth by Glenn.

Most people blame the American government on this outrageous printing of money. However, few understand that America's banking system has nothing to do with the American government. This devaluation of the American Dollar is controlled by the Federal Reserve or the Central Bank of America. Here, these journalists from Headline News explain.

Some call this whole fiasco a conspiracy theory. Watch this theory elaborated in my favourite documentary (and this is only ONE part of the movie) - Zeitgeist.

Where Is Our Economy Headed?

2009-05-04T23:22:00.001-07:00

If you are curious about where the economy is headed according to the economist who predicted the bubble/crash, you might enjoy this video clip:

http://www.ft.com/cms/1644d08e-f450-11dc-aaad-0000779fd2ac.html?_i_referralObject=1084529301&fromSearch=n

Video Clip: Understanding The Subprime Crisis and The Financial Crisis

2009-04-28T22:32:00.000-07:00

Here're some video clips for you to understand what's happening in our market.

I LOVE this clip. It's a funny explanation of the Subprime Crisis by John Bird and John Fortune (the Long Johns). They describe the mindset of the investment banking community in this satirical interview. (Warning: there're a bit of racist jokes in here but they're no worse than Peter Russell's).

And another one...not as funny but is kind of like a Understanding The Financial Crisis For Dummies.

Inside the Financial Crisis - Mortgage Madness 6 Part Series

2009-04-28T17:28:00.000-07:00

Watch these Videos on MSNBC:

Inside the Financial Crisis - Mortgage Madness - Part 1

As you watch, MSNBC will lead you to the rest of the clips. There are 6 parts altogether!

Earning Passive Income Through Real Estate Seminar

2009-04-28T15:40:00.001-07:00

For those of you who missed the seminar, here are my notes from what I gathered from the speakers.

Notes from Michael Sjerven of Yaletown Mortgage's Presentation:

lending institutions are becoming stricter with lending now
here are what lenders are looking for:

a good credit score (you can get great rates if you are 620 or more)
a steady work history
proof of income (job letter /pay stubs or 2 years of Notice of Assessment if you're self-employed)
% of downpayment

if you're self-employed, it's trickier to get a mortgage (typically lenders would want you to have 35% down)
this is a great time to refinance your mortgage and take advantage of the lower interest rates if the penalty and costs outweigh interest savings
refinancing at a lower rate also allows you to benefit from lower monthly payments and decreased amortization
you can refinance up to 95% of the value of your home
to qualify for mortgages on investment properties, you must offset the mortgage with rent by 80%
CMHC premiums are higher (<20%)
min down = 10%
beacon score 660+
one can only have maximum 2 primary residences insured
if you have a large portfolio, the ratio of rent to expense must be 1.25:1

Vancouver Real Estate Market

Port Moody and West Vancouver saw the biggest drop in real estate prices (25-35%) over the last year
Port Coquitlam saw only 3-6% drop
Mike's forecast for the next 1-2 years, interest rate will rise and home prices will continue to see a decline

My Notes from Richard Bell of Bell Alliance's Presentation:

Richard Bell has his own online television clips on BATV. You can find more information about Real Estate and Trusts there.

On Vancouver's Real Estate Market:

market stats: in 2009, 5002 units are sold vs 5343 that are on the market
for 2010, 3500 units are sold for construction that has been completed
for construction that has yet begun, only 1400 units are for sale
absorption rate in Vancouver is still high
many pre-sold condos still around, ranging between $250-450K
developers are now becoming more flexible in terms of for sale prices

On Legal Issues:

frequent mistakes people make is that they don't read the purchase contracts they sign and the disclosure statements - and if you don't understand what you're reading, hire a professional
often, in the fine print in the disclosure may contain information such as "rights" given to the Developer to change types of flooring or the square footage up to 35% of what YOU initially agreed on. But if you don't catch this, then you'll be signing your agreement to this without making an amendment to protect yourself
if you've requested for upgrades, you need to make sure that they will be done, in a timely fashion - and this will also be in a clause somewhere in the documents you've signed.
know what the obligations are from the developers when it comes to fixing the deficiencies in your unit (also contained in your contracts and documents)
if you're renting out your property, you're entitled to a GST rebate. You will have to pay the GST at first at time of purchase. However, you can apply for a rebate after 6 months, up to 36% (To be verified).
when purchasing an apartment/condo unit, get copies of the minutes and read up on them - you should go as far back as reading the last 2 years
research the property you're buying - has there been grow-ops? has an oil tank been recently removed? (this is cause for contamination and can devalue your property)
as part of the research, do a check on the TITLE of the property - this can reveal if there has been any charges (i.e. leaky condo)
know that in Vancouver, there are still 30-40% of leaky condos STILL NOT REPAIRED
if you're buying an Assignment, realize that you're entitled to your deposit + INTEREST accrued on the deposit
if you are the flipper, you need to make sure you amend that clause so that you don't have to pay the buyer interest on his/her deposit
your assignment fee may or may not include GST - be careful of this!
you can apply for a transitional rebate on your GST if you had paid 7% when you purchased your property year(s) ago. Today's GST is 5%
when dealing with assignment, some contracts will say that, without the developer's consent, the contract is not assignable - so make sure you can if you're a flipper looking to assign contracts to somebody else
know what the developers want for the assignment fee - some may charge this
some developers will demand that the assignment goes through THEIR realtor - is that something you wouldn't mind?
it is difficult for people to get a mortgage if they want to hold their property in a corporation. Not only that, it can cost more than $3000 in closing costs due to the amount of paperwork involved
best way to go about this is to purchase the property under your own name, then transfer it into a trust (called a trust declaration)
when using a real estate lawyer's office, make sure that they do ELECTRONIC FILING - this speeds up the process for you and reduces the amount of paperwork
know where your money is sitting! is it in a PC Financial or ING? because when you are closing on a deal, it would be very difficult for you to take the money out right away. it is best to have your money in a traditional institution when you want to close on deals
you should form a team of mortgage broker, realtor, lawyer, insurance advisor - people you trust and can rely on to do business
finding great insurance people is probably one of the most important component to your POWER TEAM
find insurance companies that understand strata policies
insurance comes in three main parts: 1) you need a MASTER insurance policy to protect your unit 2) you need an OWNER policy 3) you need a TENANT policy
you should not rely on the tenant to pay for your OWNER policy because often, the tenant will miss their payments and then you won't be insured. When they miss their payments and something happens, you are still liable because you are the Owner and it is your responsibility.
understand the different policies and what they cover (i.e. what happens when you lose out on rental income? what happens when there are damages to the unit?)

My Notes from John Lee of Affinity Properties' Presentation:

http://www.affinityinvestments.ca/

John presented a deal in Houston, Texas.

Minimum investment: $1000 - which buys a share in the Limited Partnership
Returns are 15-20%/year, paid out quarterly
Holding period is 5-6 years
Product: 136 Garden-Style Apartment Building, 93% rented out
Building was built in 1984
Average Unit size is 996 sq feet (1BR 1BA, 2BR 1&1.5 BA, 2BR 2 BA available)
Premise comes with swimming pool and ponds
For more information, you can email Dario Lorenzo, President of Affinity Properties at dlorenzo@affinitypropertiesinc.com

Ready to Buy a New Place? Here's a Great Deficiency Checklist to Use!

2009-03-31T17:37:00.000-07:00

Before you put down your hard-earned money on a place, it is SO IMPORTANT for you to do your due diligence on a property! A part of that homework is to make sure your new home is in excellent shape.

There are two things I learned from my real estate investing experiences regarding the checking of deficiencies and those are:

1) Be wary of what the Realtor and the Developer tells you.

I hate to say this but you can never take ANYBODY's words for granted. Not the realtors, not the developers, and definitely not the owners! There may be tons of honest people out there, but you just don't know WHO you've got. And consider this: realtors and developers are in the business to SELL you these properties - that is how they get paid! By the sellers! It is therefore in their favour to get you to come to a buying decision as soon as possible. As well, realtors are not in the profession of making sure your place is in pristine order. It is your job to make sure that that is done.

2) Brand new places are NOT perfect.

Even though you are purchasing a newly constructed place, there can still be many flaws. Usually with brand new places, you may be conducting your decifiency walk-through with somebody from the Developer's team. They will tell you that it is in their favour too to find flaws to help you fix them so they do not have to return after you spot them once you start living in it. They'll also tell you that your place is covered by the warranty and that if you spot anything, they'll be sure to come back and fix it. Don't let them fool you! 99/100, they won't come back and fix it and they'll blame the flaw on YOU. They will say to you that "This problem was not seen during the initial walk-through that we had so you must have damaged this yourself when you moved in!" Therefore, make sure to spend the money on and take the time to screen a professional inspector who can do these checks for you!

But before you invite the inspector in to have his/her expert eyes spot through the fresh paint to find problems, here are some things you can start tackling yourself.

Courtesy of Suze Orman

House-Hunting Checklist

Cast your eye high and low, to and fro, to spot cracks or leaks outside your "normal" field of vision.

If the current owners are still in residence, move their furniture. That means pulling every dresser away from the wall, especially under windows, to check for leaks, cracks and incomplete paint jobs.
Pull back the rugs—you never can tell what those fine threads are hiding.
No matter what season it is, check that the summer screens and the winter storm windows are in good shape. If you're buying in the summer, turn off the air-conditioning and crank up the radiators; in the winter, do the reverse. The last thing you want is to find out, five months after unpacking your boxes, that the heating or cooling is noisy and inefficient. Running the systems will also reveal any funky smells you wouldn't otherwise notice.
Visit at different times of the day and night to gauge street noise.
Put appliances through their paces to make sure that everything is working—and working quietly. If your purchase includes the washing machine, dryer, and dishwasher, run a load in each of them. (Bring a few dirty dishes and towels of your own if need be.) And give the garbage disposal a spin.
Turn on as many kitchen appliances as possible, simultaneously, to see whether the electrical system can handle the strain. Turn on every light in every room. And bring a small appliance to plug in to outlets to see if they work. (Your phone charger is handy for this.)
Conduct a water-torture test: While the dishwasher and the washing machine are running, head to the shower and turn on the hot tap. How are the pressure and the temp? What happens when you flush the toilet?
Ring the doorbell, and test the alarm if there is one. For the latter, ask whether it's just local or hooked up to a central monitoring system.
Measure the garage to determine that both your cars will really fit.
Find out if the neighbors own any dogs. If they have an aggressive breed and you don't have a fence, perhaps this isn't the best backyard for your toddler.
If you're buying an apartment, ask residents next door, above, and below to turn on their stereos and television sets and just walk around.
Get estimates for ongoing maintenance: In a condominium or co-op, find out how many times the common charges have been raised during the past five years and by how much. If this is your first foray into the suburbs, don't forget to factor in the cost of a gardener if you don't want to mow the lawn or of a snow-removal service if you don't shovel—same with the pool and the alarm.

Once you've completed your deficiency checks (and I suggest you always note everything you HAVE checked down because if a problem occurs months down the road, you won't remember if it was there to begin with), hire an inspector who can examine the mechanical systems and the structure as a whole.

As part of your Purchase and Sale Contract, there should be a clause stipulating that, while you do intend to go forward, the deal is contingent on the property's undergoing a professional inspection. A qualified inspector typically needs less than three hours (plus $400 or so) to reduce the chance that your home will turn into a financial nightmare. If major problems are unearthed, you can then decide to walk away—or to negotiate a lower price to compensate for the cost of upgrades and repairs.

Your agent will be quick to recommend a few inspectors, but be sure to check out their credentials. You can also ask friends or people in your network for referrals or consult the website of the American Society of Home Inspectors (www.ashi.org), which lists fully qualified professionals, if you are purchasing in the States. Once you contact someone, ask to see a list of standards or a sample report, so you get a sense of the level of detail to expect; you want to know exactly what is and isn't covered.

When inspection day comes, plan to tag along. Your inspector will work through a detailed checklist, noting how the foundation and roof are holding up, assessing the condition of the plumbing system, and searching for signs of flooding and/or water damage. Find out whether the electrical system is safe and whether the boiler is big enough to handle your brood of five. Given the rising costs of heating and cooling, ask the inspector to point out any areas where you could improve energy efficiency by upgrading older appliances, adding insulation, or replacing worn-out weatherproofing around the doors and windows. A good inspector should show you both the good and the bad—and offer suggestions for keeping the house in tip-top shape.

Virtually no inspector, however, can answer every question. You may find that you need to hire additional specialists. In earthquake-prone areas, for example, it makes sense to bring in a structural engineer. If the house is in a place known for termites or other critters that could be munching wood to death, hire a pest-control expert. If the property is planted with mature trees, it makes sense to hire an arborist because a diseased tree can be hard for non-experts to detect, especially in the winter. And if there's a pool, get a maintenance company to check out the filtration, heating, and other systems.

Are Foreclosures REALLY a Good Deal?

2009-03-31T16:02:00.000-07:00

Before going to foreclosure auctions, you should do your homework with a realtor or with a real estate professional by researching the comparables. Often times, you'll find at auctions what appears to be severely discounted properties but they may just be at market value, if not higher.

Housing prices have plunged drastically since its peak a couple of years ago. Today, we are lucky to see homes sold in the United States.

At an auction, the banks are putting the houses for "sale" at market value because they also don't want to lose out. Once bidding begins, excited buyers may even bid the home prices above and beyond current market value.

Do you know what happens to homes if it was not bidded at the auction? The banks put it out on the market to have it sold with a realtor! So sometimes, it is better to just go straight to the realtor, or better yet, go straight to the home owners to try to cut a deal. They don't need to pay the realtor any commissions and you get to go straight to the decision makers.

However, if you are still tempted to attend an auction event. GO! Just be careful, be prepared, and don't let the excitement get to you!

Hundreds Pack Foreclosure Auction in New York

2009-03-31T16:01:00.000-07:00

Watch this clip of people at a Foreclosure Auction.

Latest Housing Stats for the US - 30% Drop in Price in Several Cities

2009-03-31T15:44:00.001-07:00

According to the S&P/Case Shiller index, Phoenix, Las Vegas, and San Francisco have suffered the steepest drop (around 30%) in housing prices since the housing market peak in 2006.

And now with thousands of people unemployed, consumer confidence is also at an all time low. Reuters report that only 2 percent of Americans said they intended to buy a home in the next six months, the weakest reading since 1982.

Forfeiting Pre-Sale Contracts - Lawsuits in Vancouver Real Estate Mount

2009-03-21T17:43:00.000-07:00

Courtesy of The Vancouver Sun:

At least six developers have filed a combined 74 suits in B.C. Supreme Court in Vancouver against buyers, claiming breach of contract for failing to complete their purchases for condominium units which, in many cases, are no longer worth the prices established in original contracts.

The lawsuits are a sign of the tensions that arise when real estate markets turn from upturn to downturn, Tsur Somerville, director of urban economics and real estate in the Sauder School of Business at the University of B.C., said in an interview.

Buyers who try to walk away from their contracts run the risk of losing the deposits they put down; however, Somerville said developers also run the risk of losing all of their profits if they allow buyers to abandon their contracts.

Somerville said a developer’s choices are to take buyers to court to enforce the contracts they originally signed. However, even if the company wins those lawsuits, it still will be dealing with angry customers.

Developers, he added, also do not want to end up holding large numbers of unsold units.

Faced with the alternatives, [some developers have] decided “the smart business decision” is to reduce prices, Somerville said.

The Onni Group of Companies, which is suing 44 pre-sale buyers for walking away from units in a handful of projects, attracted headlines in January for its so-called liquidation sale of some 375 completed units at prices 25 per cent to 40 per cent off original contract prices.

Emotional Aftermaths of Foreclosed Families

2009-03-21T17:16:00.000-07:00

Here are some touching clips on the devestating affects of families who are forced to leave their homes due to financial circumstances:

Watch This Clip

What Happens to Homes After It's Foreclosed?

2009-03-21T16:55:00.000-07:00

Currently many cities in the States are undergoing a foreclosure crisis.

In the Inland Empire of Southern California, a region in and around San Bernardino, as many as 700 000 families are losing their homes DAILY. These houses are generally in newer communities with homes 8 years old or less. But due to the subprime loan crisis, house values have fallen anywhere from 30-75%.

So what happens after the homes are foreclosed?

Watch the process called "TRASH OUT" and watch workers spray the lawns green to give foreclosed homes curb appeal in a fascinating interview with Lisa Ling (Oprah's favourite correspondent):

Watch This Clip: Foreclosure Alley