Monday, December 29, 2008
Tuesday, November 18, 2008
High End Mixed Use Developments Are The Future Of Los Angeles Real Estate
I am beginning a series of blogs about some of the new up and coming high end mixed use developments that are beginning to pepper the Los Angeles Real Estate market. The first of which is The Glen At Valley Glen, along Victory Blvd in between Coldwater Canyon and Woodman Ave. I am separating each blog so that the specifics are a self contained unit. Feel free to contact me with your own requests for profiling a future and/or current development. Or send me what info you have, and I will fill in the blanks! The Glen At Valley Glen Much of the info is specific to this development, but this is also a place to discuss general trends of mixed use developments.
Tuesday, November 4, 2008
Documents Make Or Break The Deal... What You Need To Have To Be Successful
When writing an offer, whether it is to a bank or to an owner, you want to prove beyond the shadow of a doubt that you are the one buyer who will have NO problems closing escrow. This is a winning formula of documents that leaves nothing to the imagination of the seller:
1: The bank/broker prequalification letter- probobly the least important document in these times, because banks constantly renig and change thier lending requirements. But people still want to see it and always will.
2: The earnest money deposit check- generally 3% of the purchase price and generally the total amount of money that is put at risk from the buyer defaulting on his responsibilities per the purchase contract
3: Proof of funds- in the form of a checking account statement, with the account number blacked out
4: The first page of the buyer's credit report- with the social security number blacked out
5: The bio- an often neglected part of the offer, telling about the buyers financial position and incorporating emotional elements designed to appeal to the person making the selling decision. Be sure to use any and all information to paint THE most positive picture you can.
Follow this formula and half the battle is won. The other half being that you must have the best price and terms out of all the potential buyers. Does anyone else have something to add or more details on any of these points?
All That Glitters Is Not Gold
Short sales stink. That is what I tell my buyers who are looking to buy a property to move into immediately.
The MLS is flooded with homes for sale that are not truly for sale. The owners do not have the authority to sell the home, because they owe more on the home to the bank than they can sell the home for. This is what we call a short sale.
So when I carefully select the homes that are immediately available, such as traditional sales and foreclosures, I am always dissapointed that my clients do not listen. Instead of selecting from this ample pool of homes, they go to an online search source and select 20 short sales that they want to see. And they don't even know that these homes are short sales.
Almost all search tools you will find on the internet do not offer the ability to filter or even identify short sales from your search results. So get a Realtor you can trust to do this for you. Generally, the fact that a home is a short sale is concealed in the "private remarks" section that is only available to Realtors.
Nobody truly cares about getting this home to change hands but you.
This is where the frustration begins to set in. They find that they would love to own most of these homes that are short sales. And of course, who wouldn't?! When a property is priced far below market value, it seems very enticing. Until you write the offers. And then you wait. And wait. And wait. And call. And call. And call.
Even the "approved" short sales do not respond to your offers when they are written at full price! This is because the "seller" is not the seller at all, just someone who wants to save a small part of thier credit rating in order to save the disinterested and unorganized banks some money. And the listing agent doesn't care either, because they know the game. These short sales only serve to bring them more clients that usually do not end up with the short sale they initially sought to purchase. By the end of any short sale closing, the buyer and buyer's agent have spent waaaaay too much of thier own time securing a home to save the bank a buck.
So the bank, the listing agent, and the owner of the property all do not really care. Why should you? In my opinion, you should not.
Share some success stories with us, readers. I want to hear from those of you "lucky" enough to take advantage of these great "deals". And tell us, was it all worth it?
The MLS is flooded with homes for sale that are not truly for sale. The owners do not have the authority to sell the home, because they owe more on the home to the bank than they can sell the home for. This is what we call a short sale.
So when I carefully select the homes that are immediately available, such as traditional sales and foreclosures, I am always dissapointed that my clients do not listen. Instead of selecting from this ample pool of homes, they go to an online search source and select 20 short sales that they want to see. And they don't even know that these homes are short sales.
Almost all search tools you will find on the internet do not offer the ability to filter or even identify short sales from your search results. So get a Realtor you can trust to do this for you. Generally, the fact that a home is a short sale is concealed in the "private remarks" section that is only available to Realtors.
Nobody truly cares about getting this home to change hands but you.
This is where the frustration begins to set in. They find that they would love to own most of these homes that are short sales. And of course, who wouldn't?! When a property is priced far below market value, it seems very enticing. Until you write the offers. And then you wait. And wait. And wait. And call. And call. And call.
Even the "approved" short sales do not respond to your offers when they are written at full price! This is because the "seller" is not the seller at all, just someone who wants to save a small part of thier credit rating in order to save the disinterested and unorganized banks some money. And the listing agent doesn't care either, because they know the game. These short sales only serve to bring them more clients that usually do not end up with the short sale they initially sought to purchase. By the end of any short sale closing, the buyer and buyer's agent have spent waaaaay too much of thier own time securing a home to save the bank a buck.
So the bank, the listing agent, and the owner of the property all do not really care. Why should you? In my opinion, you should not.
Share some success stories with us, readers. I want to hear from those of you "lucky" enough to take advantage of these great "deals". And tell us, was it all worth it?
Tuesday, September 2, 2008
Cross Boarder Blogging Makes Good Pizza?
I am in the discovery phase of building a wood burning pizza oven at my home. I found a site that offers instructions on how to build them. After contacting the owner, he requested that I write an article for him. Check it out: How Eating Pizza With Your Friends... Can Sell Your Home Faster and For More Money?!!?
When the oven is done, we can eat some of the best pizzas around after we finish your transaction.
When the oven is done, we can eat some of the best pizzas around after we finish your transaction.
Friday, August 29, 2008
What Buyers Need To Know About Buying Los Angeles Real Estate Today
From San Diego to Los Angeles, Real Estate is moving fast. All of the negative press has mislead buyers. They are very surprised to find out that purchasing a home in Los Angeles at what is now a fair price is harder than they expected.
Buyers need to be prepared to:
1) Write multiple offers
2) Be realistic about the price they can pay
3) Not hold out for the "perfect" home at the "perfect" price
4) Monitor the market with automatic email updates
5) Do not hesitate to write an offer
6) Make themselves available to sign and return paperwork promptly
7) Possibly write offers above the asking price
8) Meet the banks terms, "take it or leave it, no repairs, buyer beware"
The people who can get loans now-a-days expect to find the home they want, make an offer, and get it accepted. This is just not how it is happening! Because the buyers have heard so much negative things, they think that no one is buying. What is really happening is that some homes that are priced poorly sit on the market for months or even over a year. But the homes that are priced right get multiple offers, 10, 20, or 50 depending on the condition of the property and the asking price.
Much of the Los Angeles Real Estate market is priced to sell now. That means that within the first week, the home will be sold at or above asking price. Many, many people firmly believe that the market will start turning back up very soon. I am a believer! Are you?
Saturday, June 28, 2008
If You Pay a Mortgage That is Higher Than Your Current Rent, You Can SAVE Money
No one enjoys paying taxes. Some people may feel it is their duty as Americans to contribute to the wasteful, bloated system that we call government. If you let them, the IRS will take your money and redistribute it to someone else through a government contract, a government job, or an entitlement program. The only way someone can create wealth is by controlling when and how they pay taxes.
Many people are not clear on the tax rules that allow home owners to save money. So here is the first explanation of how owning Real Estate saves you money and creates wealth in a tax advantaged way.
How does the mortgage interest tax deduction work?
For each dollar you pay in interest on your home, you reduce your taxable income by that amount. That is it.
An simplified example: You make $100,000 per year. You pay $50,000 in mortgage interest. Your taxable income is reduced to $50,000.
Compared to renting: If your tax rate is 25%, and you still make $100,000 per year. If you were renting, no matter how much you pay for rent, you will owe $25,000 in taxes to the government. If you instead are paying a mortgage interest payment of $50,000 you would only owe the government $12,500 in taxes.
How do you pay more on your mortgage than you do in rent and save money? Say that you pay $1,000 per month in rent and your tax rate is still 25%. Your $1,000 rent is actually costing you $1,250 after taxes. You could pay this same amount in mortgage interest tax free. So if you instead pay mortgage interest of $1,100 per month, you are saving $150 each month AND you get to own your own home.
Look forward to the next simplified tax lesson on capital gains exclusions and like kind exchanges.
Disclaimer: I am not an accountant. Tax laws change all the time. This law has been in effect for a very long time, but could change or disappear at any time. This is meant only as an informative introduction and you should always follow the advice of a qualified tax accountant.
Many people are not clear on the tax rules that allow home owners to save money. So here is the first explanation of how owning Real Estate saves you money and creates wealth in a tax advantaged way.
How does the mortgage interest tax deduction work?
For each dollar you pay in interest on your home, you reduce your taxable income by that amount. That is it.
An simplified example: You make $100,000 per year. You pay $50,000 in mortgage interest. Your taxable income is reduced to $50,000.
Compared to renting: If your tax rate is 25%, and you still make $100,000 per year. If you were renting, no matter how much you pay for rent, you will owe $25,000 in taxes to the government. If you instead are paying a mortgage interest payment of $50,000 you would only owe the government $12,500 in taxes.
How do you pay more on your mortgage than you do in rent and save money? Say that you pay $1,000 per month in rent and your tax rate is still 25%. Your $1,000 rent is actually costing you $1,250 after taxes. You could pay this same amount in mortgage interest tax free. So if you instead pay mortgage interest of $1,100 per month, you are saving $150 each month AND you get to own your own home.
Look forward to the next simplified tax lesson on capital gains exclusions and like kind exchanges.
Disclaimer: I am not an accountant. Tax laws change all the time. This law has been in effect for a very long time, but could change or disappear at any time. This is meant only as an informative introduction and you should always follow the advice of a qualified tax accountant.
Monday, June 9, 2008
If You Want To Buy Foreclosures, This Is What You Need To Know
We got a great response from the write up on short sales, so naturally we need to educate you about the other side of the same coin: ForeclosuresForeclosures are homes that have been "repossessed" by the banks for nonpayment of a mortgage. They tend to sell at less than market price for multiple reasons.
Why foreclosures sell for less:
1) The property has not been properly cared for or even vandalized by the former owners
2) The property has been sitting, without care, for months
3) Vandals and thieves have stolen valuable parts of the home, like copper wiring and plumbing, or have graffiti on the home, vagrants have or do still occupy the home, used the toilets without water services to flush, etc
4) The property may have been a failed business such as a half way house, sober living home, child care, boiler room, etc and odd alterations have been done
5) Massive amounts of unpermitted, improperly completed, and/or unfinished construction has been done
6) The banks who now own the property do not understand the local market for the home, and the employees of the bank do not have a vested interest in getting top dollar for the home
7) The Real Estate agents who sell these homes are inundated with work, are underpaid by the banks, and do not have a vested interest in getting top dollar for the home
8) The banks demand very specific terms of sale, will completely rewrite your offer, will not do ANY repairs/credits after agreeing to an offer, and have a take it or leave it attitude
With that said, why would you want to buy a foreclosure? The bank is effectively paying you for the work, permit compliance, management, and maintenance that they are not willing to do.
The way that they pay you is through a reduced purchase price, which may result you actually having equity in the home after the pricing downturn is over.
While foreclosures are a good source of investments, even better deals can possibly be found in traditionally marketed homes. Some homeowners will price their homes for sale at foreclosure prices. BUT, these homes do not have all of the drawbacks that I listed above. So, you can buy a turn-key home (one that does not need any work to live in or rent out) for a foreclosure price.
Both of these types of homes are great buying opportunities. For the investor who is shy about making repairs and renovations, buying traditionally marketed homes can be a much easier undertaking.
Tuesday, June 3, 2008
What is a Short Sale and How Do You Profit From It?
I have had MANY people asking me, "What is a short sale?". To save everyone some time, here is a concise description of what a short sale is and what you need to know about them.A short sale is ideally a "pre-foreclosure". This means that if the listing agent is educated, the property will be "distressed", the seller will have not been paying his mortgage, a Notice of Default has been filed on the property (NOD), and the seller should have a good reason why he has not been paying!
(on a side note, I have access you HUGE consistently updated lists of NODs, NOTs, and other preforeclosure info available, just ask)
Once the owner of the "distressed" property realizes that they may lose the property, they decide that they want to sell it before it goes to foreclosure.
The problems?
1: They owe more on the mortgage than the property is worth
2: Even a competitively priced property will not sell quickly in this market
The solutions?
1: Have a Realtor put the property up for sale at less than market value
2: Attract a large amount of attention and offers, usually above your very low asking price
3: Go to the bank whom you owe money to, show them the offers, and ask them to accept one and forgive the rest of the debt
The problems with the solutions?
1: Banks have a huge deluge of these types of offers coming in, and they may take months to respond to the offer, if they do at all
2: The seller gets to spend less time in control of the property in contrast to a foreclosure
An example:
You owe $100,000 on a home. In the recent downturn, the homes value slips to $50,000. You lose your job and cannot pay the mortgage. You call me and tell me your problem. I say, "I have the solution for you! Instead of letting the bank foreclose on you, let me sell your home first."
So we put the property on the market for $40,000. This is below market value, because we need to sell fast and you won't get any of the profit anyways. We show the home 30 times in 10 days, and get 10 offers. The highest offer is $45,000.
I submit a lower offer to the bank, one at the asking price of $40,000 because I don't want the bank to counter the $45,000 offer with a $50,000 price! The bank doesn't say anything to me, the listing agent. I call them, email them, hound them from all sides. Finally, 2 1/2 months later, the bank calls me and says they want to counter the $40,000 offer with $45,000.
I call the person who wrote the offer, but they already bought a house. So, I counter the $40,000 offer with $45,000. They decline because the price of the home has dipped to $40,000 during the time they were waiting, and we all just wasted 3 months of our lives trying to save the bank some money. By the way, the house gets foreclosed the next day.
How do you profit from it?
1: Write a full priced offer on every well priced short sale that you see.
2: Be patient
3: Do not become attached to the idea of owning ANY of these properties because the likelyhood that you will actually close escrow on one is exceedingly low
4: Be persistent by following up
5: Be patient
6: Submit piles of supporting documentation with your offer to verify your strength as a buyer such as your FICO score, proof of funds, preapproval letter, letters from relatives with back up funds, ect.
Realistically, short sales are not an easy way for anyone to make money. Not for the listing agent, not for the buyer, and certainly not for the seller. Everyone involved will feel short changed by the end of the transaction. You will have spent way too much of your own time looking at properties and writing offers by the time you close escrow.
In my own recent housing search, I wrote seven offers on short sales over six months ago. I still have not heard back on a single offer! In the end, all you are doing is saving the bank a couple of bucks which they apparently don't care enough about to respond promptly to your offers. Easier money is to be made with true foreclosures and traditionally marketed homes.
Thursday, May 8, 2008
Do You Want A Vacation Home In Baja?
OK, I know I said that I would be back to blogging. But an opportunity to drive down the Baja coast with two of my brothers appeared and I jumped on the bandwagon at the last minute. It was a great opportunity to see the development and progress that is going on south of the California boarder.
Image by jess hickman via Flickr
You can buy an entry level ocean front condo near Tijuana and/or Rosarito for about $150,000 with as little as 3% down payment. You will pay higher interest rates down south, so it is preferable to cash out a US property than to get a mortgage in Mexico.
Non citizens cannot technically own Mexican property. This requirement is circumvented by holding the property in a trust, with a Mexican bank or other trusted entity as the owner, with yourself as the beneficiary. Obtaining your Mexican citizenship can take a minimum of 5 years, but may be worth it for serious investors.
You probably do not want to buy a single family home unless you plan on living there or having it occupied full time. This is because the high crime rate and lack of law enforcement in most areas. You could put up a big gate, heavy locks, and bars on the windows. But this is really not necessary. You can buy 3,000 or 5,000 square foot penthouses that are larger than many single family homes anyways. And the view from the 10th or 15th floor is incredible! You can see for 20 or 40 miles down the coast from such a height.
With all that said, it is unlikely that you will want to live permanently in any city along the Baja peninsula, with the exception of Cabo San Lucas. Most condo associations are almost empty (maybe 10% occupied) at any one time.
Starting and maintaining a successful a business is fraught with problems, as corruption, reactionary and emotional government officials, crime lords, petty police, and any number of uneducated fools will get in your way.
My brother owns and operates Picante Blue Water Sports Fishing.
This is one of the most successful fishing boat sales and charter businesses in Baja. He is full of stories about the problems I listed above. It takes a special type of person to deal with these added problems of running a business.
Until the government stamps out the rampant corruption, makes education a top priority, enforces private property laws without prejudice, encourages foreign investment more fully, steps back from the socialist populist lawmaking, becomes concerned with the safety of its citizens and visitors, and generally gets its economic act together, Mexico will be relegated to be the location for second homes, vacation homes, or any other type of home where you don't want to live full time.
Image by jess hickman via FlickrYou can buy an entry level ocean front condo near Tijuana and/or Rosarito for about $150,000 with as little as 3% down payment. You will pay higher interest rates down south, so it is preferable to cash out a US property than to get a mortgage in Mexico.
Non citizens cannot technically own Mexican property. This requirement is circumvented by holding the property in a trust, with a Mexican bank or other trusted entity as the owner, with yourself as the beneficiary. Obtaining your Mexican citizenship can take a minimum of 5 years, but may be worth it for serious investors.
You probably do not want to buy a single family home unless you plan on living there or having it occupied full time. This is because the high crime rate and lack of law enforcement in most areas. You could put up a big gate, heavy locks, and bars on the windows. But this is really not necessary. You can buy 3,000 or 5,000 square foot penthouses that are larger than many single family homes anyways. And the view from the 10th or 15th floor is incredible! You can see for 20 or 40 miles down the coast from such a height.
With all that said, it is unlikely that you will want to live permanently in any city along the Baja peninsula, with the exception of Cabo San Lucas. Most condo associations are almost empty (maybe 10% occupied) at any one time.
Starting and maintaining a successful a business is fraught with problems, as corruption, reactionary and emotional government officials, crime lords, petty police, and any number of uneducated fools will get in your way.
My brother owns and operates Picante Blue Water Sports Fishing.
This is one of the most successful fishing boat sales and charter businesses in Baja. He is full of stories about the problems I listed above. It takes a special type of person to deal with these added problems of running a business.
Until the government stamps out the rampant corruption, makes education a top priority, enforces private property laws without prejudice, encourages foreign investment more fully, steps back from the socialist populist lawmaking, becomes concerned with the safety of its citizens and visitors, and generally gets its economic act together, Mexico will be relegated to be the location for second homes, vacation homes, or any other type of home where you don't want to live full time.
Tuesday, April 22, 2008
Moving Takes Me Away From Blogging
I have not been posting because I just moved into my new 3 bed, 2 bath home in NoHo. Unpacking, setting up my office, and maintaining my duties for my clients has dominated my time. I will be posting again soon.
I plan to view 3 properties priced under $290,000 in Canoga Park tomorrow morning. Details will follow on these tear down opportunities ASAP. Until then, keep on looking for investment opportunities and send me any new ideas you have!
I plan to view 3 properties priced under $290,000 in Canoga Park tomorrow morning. Details will follow on these tear down opportunities ASAP. Until then, keep on looking for investment opportunities and send me any new ideas you have!
Wednesday, April 2, 2008
If You Live in the UK, You Should Be Buying Real Estate In Los Angeles and California
For the past six months, investors from the UK have been contacting me about buying in Los Angeles. It makes sense: People from the UK can come to the states and double their money because of the extremely favorable exchange rates.
There are also cultural factors that contribute to the people in the UK understanding the benefits of owning Real Estate. If I lived on an island and was part of a culture with a long history, it would be very clear to me who the economic winners of the world are (hint: they all own real estate as their primary long term investment vehicle).
I have noticed that many of the people from the UK and other foreign countries have a lack of knowledge about the regulations and restrictions about who can own Real Estate in the USA. The answer: ANYONE can own Real Estate in the USA without restriction or applications or any other hindrance to the ownership and legal use of the property.
People who do not have a credit history in the USA will have to put a 30% down payment up to get a mortgage. But hey, when you are doubling your money that may as well be 15%! So for you investors with long term aspirations of owning many properties in the USA, start your credit history today! Talk to Katy Lin about credit, loans, and all the specifics at: (949) 981-2256
Take a look at my six month history for my web site, http://RealVana.com . The number of visits from the top ten countries are listed below. Traffic from the UK outnumbers the traffic from both the USA and Canada combined!
Also, we are always looking for more Realtors to join my site at RealVana.com . We are currently in the development stages, but would be happy to add your MLS listings to the site. If your territory is a different state than California, call me @ (818) 726-5982. The first to reserve a territory gets it locked in.
There are also cultural factors that contribute to the people in the UK understanding the benefits of owning Real Estate. If I lived on an island and was part of a culture with a long history, it would be very clear to me who the economic winners of the world are (hint: they all own real estate as their primary long term investment vehicle).
I have noticed that many of the people from the UK and other foreign countries have a lack of knowledge about the regulations and restrictions about who can own Real Estate in the USA. The answer: ANYONE can own Real Estate in the USA without restriction or applications or any other hindrance to the ownership and legal use of the property.
People who do not have a credit history in the USA will have to put a 30% down payment up to get a mortgage. But hey, when you are doubling your money that may as well be 15%! So for you investors with long term aspirations of owning many properties in the USA, start your credit history today! Talk to Katy Lin about credit, loans, and all the specifics at: (949) 981-2256
Take a look at my six month history for my web site, http://RealVana.com . The number of visits from the top ten countries are listed below. Traffic from the UK outnumbers the traffic from both the USA and Canada combined!
| Country | Visits |
| UnitedKingdom | 3437 |
| United States | 1332 |
| Canada | 1039 |
| Australia | 758 |
| Germany | 379 |
| India | 271 |
| Mexico | 251 |
| Ireland | 238 |
| Spain | 138 |
| New Zealand | 137 |
Tuesday, April 1, 2008
Turnkey Duplex
11670 Erwin Street, North Hollywood, CA 91606
The Numbers:
-$45,000 down payment (asking $469,000 but should sell for as little as $450,000)
+ $9,000 credit back from purchase
- $3,650 for adding a feature, shade, and painting front patio
= $39,650 total cash outlay
+$2,900 current potential combined rent
-$1982.81 mortgage payment (10% down, interest only, owner occupied @ 5.875%)
= $917.19 profit per month without any work
This property does not have a private feature. It also has a small shared backyard, an unfinished front patio, and a dilapidated common wall. By adding a plug in spa, inexpensive landscaping in the back, and two $299.00 canopies, you will have added large amounts of value for both units in the form of a lush, private spa.
Painting the front patio will add to the curb appeal (the valuable first impression). You should be able to rent both units for $3,450 combined after making these small fixes.
The Final Numbers:
$3,550 combined rent
- 1982.81 mortgage payment
-$562.50 tax payment
= $1,004.69 Profit after all major expenses
This income property is quick, clean, and permitted!
Call me to view this property or similar properties at (818) 726-5982 OR email me at Realtor.MG@gmail.com
To get info on qualifying for a loan on this or other properties, call Katy at (949) 981-2256
To view more properties in any area, go to http://realvana.com to search for free, with no registration required.
If you have a property that you would like me to feature here or if you currently own one that you think needs my advice on how to optimize its income potential, contact me here!
-$45,000 down payment (asking $469,000 but should sell for as little as $450,000)
+ $9,000 credit back from purchase
- $3,650 for adding a feature, shade, and painting front patio
= $39,650 total cash outlay
+$2,900 current potential combined rent
-$1982.81 mortgage payment (10% down, interest only, owner occupied @ 5.875%)
= $917.19 profit per month without any work
Painting the front patio will add to the curb appeal (the valuable first impression). You should be able to rent both units for $3,450 combined after making these small fixes.
The Final Numbers:
$3,550 combined rent
- 1982.81 mortgage payment
-$562.50 tax payment
= $1,004.69 Profit after all major expenses
This income property is quick, clean, and permitted!
Call me to view this property or similar properties at (818) 726-5982 OR email me at Realtor.MG@gmail.com
To get info on qualifying for a loan on this or other properties, call Katy at (949) 981-2256
To view more properties in any area, go to http://realvana.com to search for free, with no registration required.
If you have a property that you would like me to feature here or if you currently own one that you think needs my advice on how to optimize its income potential, contact me here!
THE Reasons Why You Should Buy California Real Estate Now (Part 1)
There is so much press out there talking about how the housing market is going to hell in a hand basket (I’m looking at you, socalbubble). Phrases like, “California Real Estate Market Continues to Crash” are being thrown around.
Image via WikipediaThat doesn’t even make sense! If you are going to call a pricing downturn a “crash” or a “popped bubble”, it should happen suddenly, right? This is simply not the case with our gradual, predictable, and cyclical Real Estate pricing adjustment that we are experiencing here in Southern California .
As you can see, there is an obvious pattern here. There is a cluster of points at the end of 2004 all the way to the beginning of 2007. Each of these points is a piece of Real Estate that was purchased and now has a notice of default (NOD) filed against is by the lender on that property. All of these points represent a home that is behind on its payments to the bank. 
Image via WikipediaThat doesn’t even make sense! If you are going to call a pricing downturn a “crash” or a “popped bubble”, it should happen suddenly, right? This is simply not the case with our gradual, predictable, and cyclical Real Estate pricing adjustment that we are experiencing here in I contend that it is downright irresponsible for these authors and bloggers to try so hard to push this “bubble” concept on the public. The dotcom bubble was a true bubble, this is just predictability at its best. The people who stop listening to the nay sayers and start looking at the facts will profit.
Here is the stuff others aren’t telling you because it is fashionable to be negative and go along with the crowd. This is part 1 of a series without a defined ending. This is why you should be buying right now.
Foreclosures are an Opportunity, Not a Warning Sign
The vast majority of homes that are now facing foreclosure have been purchased within the last few years by speculative or uninformed buyers. This graph shows over 1,000 notices of default (NOD) that have been filed during the week of 10/22/2007 in Los Angeles County and the dates that the property was purchased.
These purchases were fueled by ever loosening lending standards from the banks and fraudulent activity from mortgage brokers.
Many borrowers got what I call “Frankenstein Loans”, because these loans should have never existed. Mortgage products like negative amortization loans allowed people who could not afford homes to buy despite the price barrier.
This is what allowed housing prices to extend past equilibrium into unsustainable territory. That was the time for you to sell, while money was cheap or free to borrow.
This is the situation that gives rise to opportunity. For those of us who didn’t ruin our credit, didn’t buy an overpriced piece of Real Estate, and saved up cash, now is the time for you to buy. Here is why:
This is a graph of those same notices of default (NOD), but now it displays the amount of money in default.
In fact, the vast majority of defaults are below $50,000! For this amount or less, you could gain ownership of one of these properties.
There is a vast body of writing on how to turn these “pre-foreclosures” to your advantage. I will not review them, but many of these systems work well. But be warned: Chasing foreclosures can be a full time job. Learning about them is another matter entirely.
For those of you who want to do the footwork, I will be posting free foreclosure and notice of default lists for download. Additionally, we will be releasing free software that will allow you to search and navigate through all of this information without downloading it.
Fortunately, there are many good deals available on foreclosed Real Estate available through traditionally marketed properties. These are called REOs. After a bank has foreclosed on a property, many times they will put that piece of Real Estate on the market with a Realtor. At least one lender I know reduces the price of the homes by 5% each month until it sells. It is a game of waiting and watching for the right deal.
Click Here to add your name to a list of interested buy-and-hold investors. Indicate where and how much you want to invest in your message.
Look for my next installment, part 2: The Real Estate Market Cycle and Irresistible Market Forces
Thursday, March 20, 2008
Los Angeles Rezoning Opportunity
5742 N. Elmer Ave, North Hollywood, CA
7250 square foot lot.
The Investment Strategy: Buy and Rezone
The property has multiple apartment complexes dotted along the street. The home was built in 1920 and is a prime candidate for demolition. Buy the property, apply for a rezoning to multifamily which would allow the building of an apartment complex. Then, either sell the property for a profit to developers or complete the construction yourself.
This is an advanced strategy and is not recommended for beginning investors. The profits for this opportunity are not easily quantified because the cost of holding the property before it is rezoned can be substantial. Additionally, construction costs and zoning compliance can be highly variable and are beyond my expertise. To minimize costs, the property could be rented out for at least the mortgage payment.
The Location: Right off of Lankersheim
Walking distance to many, many desirable renter-friendly businesses. This particular street has a ghetto feel to it, with multiple males standing around together on the sidewalk before 5:00 PM. There is new construction on this street and new businesses popping up within a short walk. As rental rates rise, the less desirable elements should be squeezed out. Available parking is sparse.
To view this property, call me at (818) 726-5982. You will need at least 10% down payment to buy this property ($42,500). To view more properties online, click here
Alternate Strategy: The property is currently zoned R1.5, meaning that the owner has a right to build a guest house on the property. To cash flow the property, build the guest house and rent it out for additional income while applying for the rezone.
Guest House Tips: There are 3 things you need to do to optimize the income from a guest house. 1) Create Privacy 2) Give each unit its own yard 3) Give each unit its own separate entrance. Do these three things and a full guest house (with kitchen and bath) should double it's rental value.
What am I doing?
I have been finding awesome investment opportunities for my investors for a long time and I come across so many properties that my investors and I cannot buy, fix, construct, rent, and manage them all.
When I talk to people about how easy it is to make these opportunities pay off, I realized that their interest level is very high and that they would love to know more. If these people could only feel as comfortable as me and my investors with doing what we do, there is nothing to stop them from taking advantage of these investment opportunities.
There are millions of books with principals, theories, general ideas about Real Estate investment. I couldn't find anything with real properties that are for sale now, illustrating how to turn these into money makers. This blog is for people who a want passive cash flow, financial leverage, and the tax advantages of owning Real Estate.
All these people need is a little knowledge and advice, confidence, and to see the numbers in black and white. That is what I am going to do! You will find bits of education, tips, and important notes in big type so that you can't miss them. You will see the important numbers in similar size.
Come back often, the first person to write a check and claim a property is the one who will get it. Let me know what you think with your comments, add your own tips and knowledge, and thanks for reading!
When I talk to people about how easy it is to make these opportunities pay off, I realized that their interest level is very high and that they would love to know more. If these people could only feel as comfortable as me and my investors with doing what we do, there is nothing to stop them from taking advantage of these investment opportunities.
There are millions of books with principals, theories, general ideas about Real Estate investment. I couldn't find anything with real properties that are for sale now, illustrating how to turn these into money makers. This blog is for people who a want passive cash flow, financial leverage, and the tax advantages of owning Real Estate.
All these people need is a little knowledge and advice, confidence, and to see the numbers in black and white. That is what I am going to do! You will find bits of education, tips, and important notes in big type so that you can't miss them. You will see the important numbers in similar size.
Come back often, the first person to write a check and claim a property is the one who will get it. Let me know what you think with your comments, add your own tips and knowledge, and thanks for reading!
Entry Level Fixer
Image by simonov via Flickr6224 Denny Ave, Los Angeles (North Hollywood), CA 
What is your investment strategy? Fix and rent.
$398,000
The Numbers: 10% down ($39,800) with a monthly payment of approximately $2,200 per month with insurance, taxes, and cost of interest on the $40,000 down payment from a home equity line of credit included. Will rent for a minimum of $3,000 per month after recommended work is performed (I can find you tenants that will pay more than $3,000).
The Terms: The offer should be full priced, as the home is priced very well. A 3% credit back to the buyer will help cover closing costs and renovations ($12,000).
Your Profit: $800 per month minimum
The Location: North Hollywood is going through a revitalization. The NoHo arts district is close by, with hip restaurants and entertainment. Nearby 3+3 homes that are like new are listed for $750,000. North Hollywood is one of the few Los Angeles areas with entry level homes selling for under $400,000. This property is located just north of Oxnard, and is on the edge of a very desirable area. The price is right.
The home statistics:
| Beds 3 | Baths 2 | |||||||||||||||||||||||||||||||||
| Style Contemporary | Stories One Level | |||||||||||||||||||||||||||||||||
| ASqFt 1,310 | YrBlt 1943 | |||||||||||||||||||||||||||||||||
| ALotSize 7,379 | ||||||||||||||||||||||||||||||||||
About Privacy:
Property already has plenty of privacy, which is one key to creating value and getting premium rents.
Recommended work:
Cut back overgrown plants all over property: $200
Clean up pond, add gold fish and lily pads: $100
Plant new landscaping in a few, select places: $100
Remove old furniture, plant waste, construction debris: $300
Plant new grass seed in front yard: $150
THE Feature:
The pool is THE feature for this property. Creating a feature such as a fish pond, pool, jacuzzi, or other centerpiece for the yard is a key element to creating value and obtaining higher than average rents.
The pond is already present, but in unimpressive, small, and poorly situated. The pond cannot count as the necessary feature because of its shortcomings.
Tip for ponds: Use gold fish, not expensive Koi. Renters may not feed the fish, may let the pond dry up, or simply not take proper care of fish. Gold fish turn wild and adopt entertaining behavior when put in an outdoor environment.
Tile floors throughout 65% of home with neutral, durable tile: $3,500
Repaint entire interior with neutral, sand colored paint: $750
Other property features: Enclosed patio that adds value to the property, not included in square footage. 1 carport. Detached garage. TONS of storage.
Kitchen is clean, no needed work. New counter tops would add value for resale, but not needed for the first two years of renting.
Total Fixing costs of $5,100
To open escrow, you need to write a check for $12,000 from your savings or home equity line of credit as your earnest money deposit.
$40,000 down payment
+ $5,000 renovation cost
- $6,000 credit (closing costs already removed)
= $39,000 required for this opportunity
Foreign investors without a credit history will need 30% down, or $133,333 to get a mortgage.
View more homes in North Hollywood: http://realvana.com/california/los-angeles/north-hollywood.html
To take this opportunity or to look for similar investment opportunities, call me at (818) 726-5982
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