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The Norris Group Real Estate News Roundup 4/14/11

Thursday, April 14th, 2011

Today’s News Synopsis:

Statistics from MDA DataQuick show 7,051 houses and condos sold in the Bay Area last month. CAR says home sales increased 3.1% in March. According to RealtyTrac, foreclosure filings dropped 27% year over year. A newly proposed bill may require mortgage servicers to respond within 45 days of receiving a short sale request.

In The News:

MDA DataQuick – “Sales up, Prices Down for Bay Area Housing Market” (4-14-11)

“A total of 7,051 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 41.3 percent from 4,991 in February and up 0.2 percent from 7,040 in March 2010, according to San Diego-based DataQuick.”

CAR - “March sales and price report” (4-14-11)

“Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 514,090 units in March, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. Sales in March increased 3.1 percent month-over-month and 1.5 percent year-to-year, aligning with C.A.R. sales expectations for 2011.”

Inman - “Feds announce partial settlement with ‘robo signing’ servicers” (4-14-11)

“In a partial settlement addressing so-called ‘robo-signing’ foreclosure practices, the nation’s largest loan servicers have agreed to hire outside consultants to review foreclosures initiated in 2009 and 2010, and to compensate homeowners who should not have been foreclosed on.”

Los Angeles Times – “Mortgage rates continue to edge higher” (4-14-11)

“The average rate for the benchmark mortgage rose for the fourth straight week, according to Freddie Mac, which said in a report Thursday that the lenders it surveyed were offering 30-year loans at 4.91% this week.”

CNN - “Foreclosures off 30% this year” (4-14-11)

“The number of foreclosure notices filed during the first three months of 2011 fell 27% compared with the first quarter of 2010, according to a report from RealtyTrac released Thursday.”

NAHB - “Proposed QRM Harms Creditworthy Borrowers and Housing Recovery” (4-14-11)

“In the midst of a very fragile housing recovery, the government is throwing a devastating, unnecessary and very expensive wrench into the American dream. First time homebuyers will have to choose between higher rates today or a 9-14 year delay while they save up the necessary down payment. And 25 million current homeowners would be locked out of lower refinancing rates because they lack the required 25 percent equity in their homes.”

Housing Wire – “Jobless claims unexpectedly rise to 412,000 last week” (4-14-11)

“For the week ending April 9, Americans filed 412,000 initial jobless claims, which is 27,000 more claims when compared to the previous week’s revised figure of 385,000.”

Housing Wire – “Bill introduced to speed up short sales” (4-14-11)

“A bill was introduced in the House of Representatives this week, requiring mortgage servicers to respond within 45 days of receiving a short sale request.”

Bloomberg - “U.S. Foreclosure Settlement Muddies Outlook for Mortgage Relief From Banks” (4-14-11)

“The 14 largest U.S. mortgage servicers, including JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC), agreed to review all foreclosed loans from 2009 and 2010, and pay back losses in cases that were mishandled. They also will improve procedures by hiring staff, upgrading document-tracking systems and assigning a single point of contact for each borrower. ”

Orange County Register – “Are these home prices too good to be true?” (4-14-11)

“There have been 79 short sales that have closed escrow in Huntington Beach thus far this year. They have sold for an average of 99.9% of their list price. That’s a pretty incredible number. I fully understand the reasoning for aggressively pricing a short sale listing. Agents want to get an offer in front of the bank as soon as possible to get the ball rolling on the short sale. But I think this has to be done within reason.”

Orange County Register – “O.C. hotel room rates jump 6.6%” (4-14-11)

“The lodging experts at Colliers PKF report that Orange County hotels in February saw average room rates at $138.19 per night — that is up 6.6% in a year (or $8.52 a night.) Meanwhile, 67.3% of Orange County hotel rooms were filled vs. 63.9% the year earlier.”

Housing Wire – “Lawmakers to consider reducing QRM down payment to 10%” (4-14-11)

“Lawmakers in the House of Representatives are considering a push to lower the 20% down payment required for exemption of the recently proposed risk-retention rules on securitized mortgages.”

Looking Back:

One year ago, the U.S. Treasury reported more than 1.4 million borrowers had been offered trial modifications under HAMP. The MBA’s weekly survey showed that mortgage application volume decreased by 9.6 percent from the previous week. Banks required over 25 percent more time to foreclose a property in in California from the previous year. According to statistics from the Federal Reserve’s Beige Book, overall economic activity increased in nearly all parts of the country.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 4/5/11

Tuesday, April 5th, 2011

Today’s News Synopsis:

Two Wall Street firms claim housing prices will continue to fall through the present quarter. REIS reports the national office vacancy rate fell to 17.5% in the first quarter. A Harris Poll shows 22% of U.S. homeowners are having difficulty making their mortgage payments. A new RealtyTrac feature allows users checking home listings to see how much equity each property has.

In The News:

NAHB - “Home Builders Applaud Congressional Passage of 1099 Repeal” (4-5-11)

“The Senate today approved legislation supported by the National Association of Home Builders (NAHB) to repeal a burdensome tax paperwork requirement that could cost small businesses thousands of dollars each year. The bill now goes to President Obama for his approval.”

Orange County Register – “59% of H.B. homes pending sale are distressed” (4-5-11)

“59% of homes in escrow are short sales, in foreclosure or bank owned. 42% of homes sold in March were distressed.”

Housing Wire – “Democrats’ homeownership assistance bills face fiscal resistance” (4-5-11)

“Senate Bill 690 and H.R. 1238 — would create a new executive position under the Treasury Department to advocate for homeowners and free up remaining TARP funds to help distressed homeowners with legal assistance.”

Housing Wire – “KBW says eight GSE reform bills barely dent mortgage market” (4-5-11)

“the proposed legislation addresses oversight issues, which means little structural change will manifest because of them, according to a report released by KBW Tuesday.”

CNBC - “No Spring Break in Housing: Prices Likely to Keep Falling” (4-4-11)

“Housing prices will not get a Spring bounce and will actually fall during the industry’s historically best season as buyers continue to wait for that elusive ‘housing bottom,’ according to surveys and analysis by two top Wall Street firms.”

Wall Street Journal – “Lenders Near Pacts With Regulators in Foreclosure Probe” (4-4-11)

“Fourteen U.S. lenders are on the verge of agreements with federal bank regulators to overhaul their handling of foreclosures and treatment of delinquent borrowers in response to allegations of abuses that emerged last fall.”

Bloomberg - “KB Home Reports Wider First-Quarter Loss as Revenue and Orders Plunged” (4-5-11)

“KB Home (KBH), the Los Angeles-based homebuilder that targets first-time buyers, fell the most in four months in New York trading after reporting a bigger-than- expected loss as orders plunged.”

Bloomberg - “Office Market in U.S. Begins Recovery as Vacancy Rate Declines” (4-5-11)

“The national vacancy rate fell to 17.5 percent in the first quarter from 17.6 percent in the previous three months, Reis Inc. said in a report today. The drop was the first since July through September of 2007.”

Orange County Register – “U.S.: World’s 7th worst housing market” (4-5-11)

“The United States had the 7th worst housing market in the world in the fourth quarter, according to year-to-year price changes tracked by the Knight Frank Global House Price Index.”

Orange County Register – “32 million people struggling to pay mortgage” (4-5-11)

“A new Harris Poll shows that 22% of U.S. homeowners with mortgages — 32 million people — are having a tough time making payments, including 7% — 11 million folks — who say they’re experiencing ‘a great deal of difficulty’.”

Orange County Register – “Irvine housing speeds up 17%” (4-5-11)

“Irvine’s housing market has 85 days worth of inventory of residences to sell vs. 96 days countywide. That’s according to the latest inventory math of Orange County broker Steve Thomas.”

Housing Wire – “New RealtyTrac feature lists property equity” (4-5-11)

“RealtyTrac unveiled a new feature on its website Tuesday that enables users going through the home listings to see how much equity each property has.”

Housing Wire – “Wells Fargo-Wachovia settles CDO claim with SEC for $11 million” (4-5-11)

“A Securities and Exchange Commission investigation into Wachovia Capital Markets’ sale of two collateralized debt obligations supported by residential mortgage-backed securities resulted in Wells Fargo Securities agreeing to pay $11 million in fines and penalties this week.”

Looking Back:

Pending home sales increased by 8.2 percent from January to February. A new rule will require all new lender applicants for FHA programs to possess a minimum net worth of $1 million. According to LPS, the average loan in foreclosure is 401 days delinquent.  A proposed bill, House Resolution 4935, will prohibit mortgage servicers from holding another mortgage on a property that also secures the serviced mortgage.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 2/24/11

Thursday, February 24th, 2011

Today’s News Synopsis:

The FHFA claims 30-year interest rates averaged 4.85% in January, and home prices fell 4% year over year. House Republicans intend to end anti-foreclosure programs put in place by President Obama. The Commerce Department said new home sales decreased 13 percent in Janurary.

In The News:

Housing Wire - “Affordable housing ratings stabilized in 2010: S&P” (2-24-11)

“Ratings on unenhanced and unsubsidized multifamily affordable housing projects stabilized in 2010 thanks to the absence of bond insurance policies that previously had a negative impact on ratings, Standard & Poor’s said Thursday.”

Housing Wire – “Fed finalizes rule on jumbo loan escrow requirements” (2-24-11)

“The Federal Reserve finalized a rule that will raise the threshold requirements for when a first-lien jumbo mortgage is required to establish an escrow account to hold property taxes and insurance.”

Housing Wire – “FHFA and Freddie: Mortgage rates hovering near 5%” (2-24-11)

“The average interest rate for a 30-year, fixed-rate mortgage increased 24 basis points, hitting 4.85% in January, according to the Federal Housing Finance Agency.”

Bloomberg - “House Republicans Move to End Foreclosure Aid Programs” (2-24-11)

“Republicans plan to move forward with bills that would end anti-foreclosure programs put in place by President Barack Obama’s administration, saying they are doing more harm than good.”

Bloomberg - “U.S. Commercial Mortgage Defaults Decline as Prices Recover” (2-24-11)

“The default rate on loans for office buildings, malls and other commercial properties dropped to 4.28 percent of loan balances from 4.36 percent in the third quarter”

Bloomberg - “Home Prices in U.S. Decline 4% on Foreclosures, FHFA Says” (2-24-11)

“U.S. home prices fell 4 percent in the fourth quarter from a year earlier as record foreclosures sapped the confidence of homebuyers, according to the Federal Housing Finance Agency.”

Bloomberg - “Sales of New U.S. Homes Fell More Than Forecast in January” (2-24-11)

“Sales declined 13 percent to a 284,000 annual pace, figures from the Commerce Department showed today in Washington. The median estimate of economists surveyed by Bloomberg News projected a decrease to a 305,000 rate. Demand dropped 37 percent in the West”

Orange County Register – “America’s most-searched housing markets” (2-24-11)

“Orange County landed at No. 17. Other noteworthy California markets high on Realtor.com’s survey of 250 markets were: Los Angeles (at No. 3); Riverside-San Bernadino (11th); San Diego (15th); and Oakland (29th.)”

Looking Back:

One year ago, the MBA reported that mortgage loan application volume decreased 8.5 percent from the previous week. Purchases of new single-family homes decreased by 11.2 percent in one month. Informa Research Services announced the average interest rate on 30-year fixed-rate jumbos dropped to 5.79%. Freddie Mac’s net losses for 2009 ended at $25.7bn.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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207-TNG Radio – Norris Group 1-1-11

Friday, December 31st, 2010

Greg Norris

(Full Bio)

 

Craig Hill

(Full Bio)

The Norris Group

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This week Bruce is joined by Greg Norris and Craig Hill. Greg is the vice president of TNG Auctions. He buys properties and resells them. Craig has been working with Bruce for 15 years, and is responsible for speaking to all potential borrowers for The Norris Group.  

Craig’s business was extremely busy during the first part of the year, but it became even busier toward the end as inventory decreased.  Inventory is down 75% for REO buyers.  

When Bruce and Craig first met, most of the business revolved around doing seconds for owner occupants in financial trouble. At this point, most of Craig’s business involves doing short term loans for investors who buy fixer properties and long term loans for investors who hold rental properties. This business works well for TNG, because banks do not want to loan money out to investors. Banks have stopped making common sense loans. The TNG hard money program allows investors to own property at 9.9% interest. These properties often cash flow well, and the monthly payment is often cheaper than rent.  

Greg has discovered that most homes found at trustee sales involve smaller rehabs, newer homes and bidder areas. Trustee sales have made Greg’s job simpler, because the best deals for REOs usually involve heavier REOs. Discounts on trustee sales are smaller than on REO sales, and trustee sales are much more competitive.  

The number of people who attend trustee sales depends on the amount of inventory and the kind of inventory. The largest number of people Greg has ever seen at a trustee sale is 50 to 70, but out of that group only about 8 to 10 were big investors.  

10 years ago, trustee sales did not involve drop-bids, people had equity, and the investors involved in the business had been doing it for a long time. In some ways, Greg thinks the changes that have occurred in the trustee sales have made it more difficult for individual investors, but in other ways, it has become easier. Some of the individual investors are using their own money, so they don’t have another investor they need to repay, and they do smaller volumes. Sometimes you cannot compete with those people, because they are doing their own rehabs and they only buy a few properties every year. Some of them will buy properties for $20,000 over what Greg would be willing to pay. Because those buyers have limited research ability, Greg prefers to simply wait for those buyers to leave.  

Greg’s typical day begins by doing research on properties with open bids, and other properties that may potentially drop into open bid. At 9AM, he attends the sales. After he attends the sales, he deals with real estate and repair contracts, and then prepares for the next day’s sales.  

TNG’s loan clients have an unmatched level of experience in the industry, and Craig truly appreciates this. Craig’s phone is nearly constantly ringing. Many people discover TNG’s program through the internet, referrals, and from Bruce’s many speeches. TNG has gained a lot of respect for being a Southern California only real estate business and for being in the investment business for a long time. The most rewarding referrals come from people who have heard about TNG from multiple people, and decide to talk to us out of curiosity. Sometimes investors in the field are referred to TNG from agents who tell the investors, “If you can get a preapproval letter from The Norris Group, I will accept the offer.” That speaks more than any referral, because it means people know that TNG only approves of deals that are closable.  

This year, Craig was surprised by how much volume picked up on long-term financing. There is a huge demand for this. Bruce believes TNG’s long term financing will perform at a very high level, because a lot of inventory will come out. This kind of financing will not work as often with an owner occupant as it will with an investor. A lot of rehabs and lower priced properties are turning into buy and holds, rather than flips. Craig believes it is challenging for investors to flip $100,000 to $150,000 homes in this market, because there are many investors willing to buy and hold. An investor who can buy and hold can probably pay more, because they will receive a cash flowing property that will give them a profit for 10 more years.  

Bruce believes the 203K FHA loan program will probably return next summer. The problem with that program is that it probably takes 45 days to fund it. That makes the loan hard to sell, because a deal can be closed much quicker than that. In some cases, TNG will do a deal in 7 days or less. The speed of the deal makes a big difference in an investor’s willingness to buy.  

The automation of TNG’s website has helped Craig tremendously, because it allows him to handle phone calls and it has automated TNG’s loan process. TNG’s loan business has doubled over the last 12 months, and the time to fund those loans has gone down.  

Greg only gets to see the inside of his potential property purchases about 5-10% of the time. Only 10-15% of those properties are unoccupied.  

Two of Greg’s employers, Joe and Kenneth, are responsible for going to every house, evaluating repairs, and talking to the owners to determine whether or not they are difficult to deal with. When Joe and Kenneth are not viewing houses, they are doing construction contracts.  

Guessing the cost of a rehab when you cannot see inside requires a lot of experience. Greg often guesses based on the age of the home. For example, a house built in the 80s will probably require more cabinets than a house in the 1990s or the 2000s. You can learn a lot more about this if you come to a TNG bootcamp.  

Realtors are very pleased with TNG homes, because they are in great condition and they are standard sales. Realtors get tired of wasting their time with REO and short sales. Also, TNG is easy to deal with so long as they do their job. Bruce Norris once attended a Realtor group meeting in which an agent stood up and said, “We wish The Norris Group would buy every REO in town, because of how they deal with properties, and how they turn out.”  

Finding a reliable contractor can be tough. TNG has improved its business because of the relationships it has built with contractors over an extended period of time. If you keep your rehabs consistent, then your rehabs will get easier for your contractors, and they will have your same mentality. When a contractor has done enough repetitive jobs with you, they can advise you on how to best rehab your properties based on previous jobs.  

It takes a while to build a good investment team, and your team doesn’t just involve your contractor; you need to have lenders and escrow partners. All those people will help you get to the finish line faster, and if you aren’t going to get to the finish line, then you will be notified sooner, so you don’t waste time on the market. Dishonest lenders do not want their deals to fall out, and will lie with the hope that some money might show up. Greg tries to make sure that he is working with a serious buyer by making them spend money to finish the deal.  

When Greg first started doing trustee sales, a lot of people were using all cash and conventional loans. A lot of people got fooled into feeling that they had to buy because of the government incentive. If they had waited 6 months, they would have gotten more than $10,000 back, because the market adjusted down. Right now, Greg is seeing a lot of VA and FHA offers, and very few conventional offers. Only 1 out of every 10 of Greg’s deals fall out. Greg does a good job of weeding out bad buyers before escrow. Bruce feels that Greg has made a wise decision to force potential buyers to put effort into the property before it goes to escrow.  

Every year or two, trends change in the loan business. In 2009, TNG dealt almost exclusively with REO. In 2010, we got more trustee sale buyer refinances. Those were people like Greg who would attend trustee sales, and then refinance to leverage the property. In the last six months, Craig has noticed an increase in people buying short sales. The short sale process is no longer a half year long process. Some short sales can be completed in less than 60 days. The bulk of TNG’s business is still REOs. This is probably due to the fact that TNG’s clients are experienced, and they have relationships with REO agents.  

Short sale agents do repetitive business with buyers they are comfortable with, so developing a relationship with an agent can lead to repetitive purchases. The nice thing about a short sale is that you get to see the inside of the property, title insurance, and it is less likely to be in bad condition.

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200-TNG Radio – Alvarez, Cantu, & Solis 11-13-10

Friday, November 12th, 2010

Tony Alvarez

Veteran Investor

(Full Bio)

Mike Cantu

Veteran Investor

(Full Bio)

Rick  Solis

Veteran Investor, Appraiser

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This week Bruce is joined by Mike Cantu, Rick Solis and Tony Alvarez. Mike Cantu has been an investor in the Inland Empire for over 25 years. He has been a builder, rehabber and property manager. Rick Solis appraises all of The Norris Group’s loans, and he is also an investor. Tony Alvarez has been an appraiser, residential and commercial property buyer and author. This is The Norris Group’s 200th radio show.

Bruce begins by asking Mike about what he learned from the 90s that helped in the most recent down turn. All things come full circle. A good market will eventually become a bad market. The down turn took longer this time, but it hit much harder. Sales dropped off the cliff, but fortunately, Mike began preparing for the down turn in 2004. Tony agrees with Mike.

During the evening of Obama’s election, a newsletter was put out, which was titled “Obama Administration Sings New Tune on Foreclosures”. The article is laughable. The media went from saying “no foreclosures” to “foreclosures are the answer to this problem”.

Rick began investing in 1989. He was not very active in the 90s. The main thing he learned from the 90s was that you can miss many opportunities when you ignore the market. A lot of people are afraid of the market right now, but Rick won’t let that fear control his investing plans.

Bruce believes that fear certainly is affecting the market now. People are afraid to buy properties despite the fact that prices have dropped 50% and interest rates are historically low. Its hard to believe that not buying could be perceived as a rational decision. Rick Solis has never seen a better time to buy houses since he began investing. Bruce definitely believes that it is the best time to buy and hold.

Tony just bought a completely rehabbed duplex. In 2007, it sold for $175,000, but he bought it for $35,000. The saddest part is that the duplex sold with multiple offers. The reason why so many people are afraid of buying is because they are paying too much attention to the media’s opinion.

Mike knows many investors, but only a small number of them are still investing. The number one problem that caused them to fall out of investing is their overly expensive life style. A lot of people learned how to make money in real estate, but not many people learned how to keep it. The investor pool has shrunken significantly. Many people would like to invest in real estate right now, but they made bad decisions at the top of the market, which handicapped them from buying. Mike agreed with Rick and Tony when they said that now is the time to buy.

Mike is a fairly frugal person. Bruce laughed when he saw Mike’s 1998 Toyota truck. It has 441,000 miles, but it runs like a champ. When a dog gets old, you don’t get rid of it, you just take better care of it. Mike has a hard time spending money on a vehicle when you can get a rental house for the cost of a new car. Every time Mike sets money aside for a new truck he ends up spending it to buy a new house, and he realizes that his truck is just fine.

Mike’s daughter recently began investing in real estate. Mike helped her develop a 5 year plan for buying cash flow houses in good neighborhoods. Their goal is to help her get $3,500 of cash flow per month, and they are half way there.

If Tony could have done anything differently throughout his career, he would have focused harder on one segment of the market place. He wishes he had been more aware of the value of his time. Tony spent a lot of time driving to deals that didn’t have much potential.

Tony prefers to buy and sell, but he currently owns 40 rentals. Before the peak, he had 100 homes. He wanted to get out before the peak, but Bruce encouraged him to not sell for another 3 years. Bruce’s advice helped Tony gain an extra $3 million in profit. Tony is now buying some of the same houses that he sold near the peak. In the past, Tony would buy almost any property he could. Some of the properties he bought and sold were in such a terrible condition that they have now been destroyed. He doesn’t buy properties that are that terrible any more, but he is still willing to buy wood structure homes and other properties that people tend to stray away from.

If Rick could have done anything differently in his career, he would have sold all his properties by 2006. Rick has accumulated quite a few properties, and he is glad to have them, but he is not looking forward to managing them.

Mike chose not to sell his properties despite the fact that values were sinking, and he does not regret that decision at all. Mike got into real estate for the cash flow, so that all his expenses would be taken care of. He knows people who are struggling right now and have to make a deal every month to keep food on the table. The value of his rental properties is immaterial to him. He has not had to reduce rents by any more than $50, and he has had no difficulty in keeping them occupied.

Mike was the person who introduced Tony to the concept of exchanged junky homes for quality rental homes. Exchanging for quality rental properties allows you to keep rentals in competitive areas, and it helps reduce the amount of time spent on property management.

Bruce has learned a lot from observing the business models of other people. When Mike told Bruce that he wanted to obtain 10 rental properties, Bruce decided to try and do the same. Having free and clear properties gives you sanity when making investment decisions. If you are playing catch up on equity, or if you are relying on today’s deals to pay tomorrow’s meals, you tend to make riskier decisions. Bruce and Mike don’t have to make potentially risky decisions because they both have enough cash flow to get by.

One of the big differences that Tony has noticed between 2010 and 2009 is that many investors have left his market. Also, approximately 80% of his purchases went from being new listings from agent calls to pending deals. Fifty percent of the deals occurring in Tony’s area fall out of escrow 1 to 3 times. This has caused Tony to become more cautious when buying. He has dropped his rents by 20% in the last 12 months. He has also lost some of his tenants.

Rick noticed that when the stimulus program was going on, entry level properties experienced up to a 10% increase in value. Moreno Valley and Corona had a big increase in activity. That 10% increase has now disappeared. Rick will not buy a house right now unless the deal can work as a rental. Many investors have recently bought homes they thought would easily resell, and they are now stuck with them. Bruce will not buy a home on leased land.

From the beginning of 2009 to the end, we went from a period of market uncertainty to confidence. In 2008, Mike decided not to do a retail deals unless he could keep those houses as rentals. Mike does not use any July comps any more; comps must be within the months of August, September and October. There is a 5 to 20% difference between homes being sold now and homes sold in July.

Mike believes there are still a lot of people who will not accept the fact that their home values have significantly decreased. A lot of the private market is still in denial.

Rick invests primarily in Rialto, Hesperia and Victorville. Rick and his business partner work with rehab properties. He rents his properties slightly below market value and they are in good shape, so he has a lot of demand. Many times he has a security deposit and a tenant lined up before he closes escrow. He does not have any trouble with rents dropping. His typical house is a 3 bedroom, 2 bath. He loves it when he can squeeze a 4th bedroom into the house by cutting the living room in half. He usually rents the 3 bedroom houses for $1,000, and the 4 bedroom houses for $1,100.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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183-TNG Radio – Tony Alvarez 7-17-10

Friday, July 16th, 2010

Tony-Alvarez

Tony Alvarez

Author and Investor

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This week Bruce is joined by Tony Alvarez. Tony is a successful investor. He now lectures inside and outside California. Tony is the author of Breaking Into The REO Business. How I Went From Bankruptcy to $7.2 Million in 7 Years While Making Friends.

After the Multi-Millionaire event, Tony spent five years writing his book. Some self proclaimed real estate educators are using things like infomercials to rip people off. Tony was speaking in Vegas some time ago, and while he was there, he heard a story from a young man who spent $40,000 on real estate classes. When this young man was later sent the list of all the classes he paid for, he realized that they were taking place in different states, and he had no way to pay for the traveling expenses. Tony has met many people who are paying large sums of money to learn about real estate, and many of them are being scammed.

You do not need to pay $15,000 to learn how to buy a house. Tony’s book is 25 dollars. You can check out Tony and his website at www.tonyalvarez.com. Tony put a lot of effort into writing this book, and if you can get past the first 10 pages of his book without understanding that he really wants to help you, then you are missing the point. Tony only teaches about what he knows, and Tony knows all about the REO business. 95 percent of the houses he has bought were been bought using REO agents.

The third section of Tony’s book is called “14 distinctions for the lazy and incompetent.” Tony works very hard at what he does. Bruce thinks that Tony’s definition of “lazy” can be more easily translated to “efficient.” Tony focuses his attention on what he knows well, and he kicks everything else to the curb. Tony retires when the REO business is not performing well.

Tony was ready to sell his investment houses 3 years before the last peak. Before Tony sold his houses, Bruce advised him to hold on for a little longer. Three years later, near the end of the real estate boom, Bruce advised Tony to sell. Tony made 3 million dollars by taking Bruce’s advice. Tony claims that Bruce Norris makes a millionaire nearly every day he teaches. After Tony sold his houses, he bought two homes near rivers, and spent two and a half years on vacation. Tony works really hard when he works, and when he is done working, he stops completely.

When Bruce speaks at an event, he often gets an ovation afterwards. Bruce has noticed that every time Tony speaks at an event, Tony has a line of people trying to hug him afterwards. That is not a typical response.

Some people might feel intimidated by Tony, because they do not feel that they can compete with his personality. Tony interviewed the REO agents he worked with, and he discovered some of the reasons they chose to work with him. Perhaps the most important reason why these agents chose to work with Tony is because he never lied to them regardless of the consequences. When Tony had a problem with a deal that an agent gave him, he would schedule a meeting with them so that he could personally explain to them why he refused. Tony always explained to his agents what he needed in order to take a deal. Tony does not like telling agents that he does not want a deal; he tells them that he will take the deal when the numbers work for him.

When Tony interviewed 3 of his agents, they told him that they want to be told the truth, and they want investors to treat them pleasantly. An agent’s job is frequently unpleasant, because they have to evict families and they have their asset managers constantly complaining about their inability to sell quickly. Agents receive 30 calls a day from investors who want to buy foreclosures. You need to solve a problem for them. You cannot buy yourself a relationship if you only call for properties that will earn you an easy profit. If you do that, you will only be called for bad deals. You have to care about the agent’s success as much as your own.

Even an agent’s best investors sometimes cause problems. There are times where an experience agent will back out of a deal in the middle of escrow, because they discovered that a deal was not as good as they thought it was. Once you make a commitment to a deal, you need to stick with it regardless of the outcome. Never complain when a deal does not work out to your benefit.

You do not build relationships at the same speed you perform your business. Building a relationship takes more time. Building a relationship requires you to pay attention to the needs of another individual. Tony does research on the agents he works with. He discovered that some of them had children who belonged to baseball teams, so he donated money to the teams and bought from their candy fundraisers.

If relationships are not getting deeper, they are probably falling away. Realtors are going to first call you with their worst deals. You have to explain to them why you cannot do those deals unless they can get the numbers to work. Doing this will set you up for your first great deal.

When Tony buys a property from an agent, he will come back to that agent when it is time to sell that property. Other agents take notice to this kind of business. When the market peaked last time, Tony’s agents had no idea that he had obtained that many properties from them, and they were blown away. When he asked them to help sell those same properties, some of them were even jealous. Tony explained to them that he could not have obtained these properties without them.

Always thank the agents responsible for your success, both privately and publicly. When other agents notice you doing this, they start asking questions about what you’ve done. One of the agents that Tony worked with gained $500,000 in commissions within weeks, because the properties sold so fast. Tony did not have to do that, but in his mind, that is the only fair way to do business. The 1980s version of Tony would not have done this. Back then, Tony would have been selling his properties on his own, and squeezing every penny from the Realtors he worked with.

Tony states in his book that he is “relentless in loving the people [he] meets.” Tony believes that if he is not doing this, then he is not doing his job. Tony does not feel alive when he is not doing that. When you are kind to someone, it positively affects yourself, the person you are kind to, and the witness. Tony believes in a Creator, and he believes that if the Creator created you with that kind response to love, then you should not ignore it. The love you give others will increase your own happiness, and Tony does not believe that there is any other true recipe for success.

Tony’s book is called Breaking Into The REO Business. How I Went From Bankruptcy to $7.2 Million in 7 Years While Making Friends.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 7/7/10

Wednesday, July 7th, 2010

Today’s News Synopsis:

The MBA reports mortgage loan application volume increased 6.7 percent from last week. Delinquencies on home equity loans decreased to 4.12% in the first quarter. 89 percent of mortgage lenders intend to, or already, offer Web-based mortgage application services. The average price discount on foreclosed properties nationwide is 26 percent.

In The News:

Mortgage Bankers Association – “Mortgage Refinance Applications Increase in Latest MBA Weekly Survey” (7-7-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 2, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 6.7 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 6.5 percent compared with the previous week.”

CNet - “Freddie, Fannie reject energy retrofit loans” (7-7-10)

“The FHFA said it does not object to all energy retrofit loans, but specifically to those PACE or PACE-like energy loans that are essentially structured as property taxes and, therefore, have first lien. In the event of a foreclosure on the property, those loans are legally required to be paid off first before any money goes to the mortgage lender.”

Los Angeles Times – “Home equity loan delinquencies fall for first time in two years” (7-7-10)

“The percentage of home equity loans on which consumers were at least one payment late declined to 4.12% in the first quarter from 4.32% the previous quarter. Not since the first quarter of 2008, when the rate fell to 2.34% from 2.39%, had there been a decline. Missed payments on consumer loans overall improved for the third straight quarter, the ABA said in its quarterly Consumer Credit Delinquency Bulletin. Bank card delinquencies fell from 4.39% to 3.88% of all accounts — the first time since 2002 that card delinquencies were below 4%.”

Housing Wire – “When it Comes to Servicing Ginnie Mortgages, BofA Scores Again” (7-7-10)

“BofA-serviced Ginnie loans ranked among the lowest in terms of 60-day delinquencies (less than 1% in May), followed closely by Wells Fargo (WFC: 26.67 +6.04%) (just over 1%). Countrywide loans had the highest 60-day delinquency rate of around 3%”

Housing Wire – “Tech Developer’s Survey Finds Lenders Expect Surge in Online Mortgage Volume” (7-7-10)

“18% of mortgage lenders offer so-called ‘smart’ Web-based mortgage application services. The survey defines ‘smart’ software products as those that are interactive mortgage-application systems that are a fully transactional, Web-based solution that intelligently guides borrowers through the application, adjusting the questions for applicants according to responses. Of the remaining companies that current do not offer the service, 71% said they will adopt online mortgage application technology sometime in the future, while 14% said they would not. The remaining 15% responded they were unsure.”

Bloomberg - “U.S. Commercial Property Sales Trail Six-Year Average” (7-7-10)

“U.S. commercial real estate sales in the first half totaled about a quarter of the average of the previous six years as owners kept properties off the market, impeding investors with record funds for purchases. Buyers and sellers completed $34.2 billion of deals through June, or 26 percent of the average first-half dollar volume since 2004, according to preliminary figures from Real Capital Analytics. The total was about 12 percent of the 2007 peak, when $277.7 billion of properties changed hands in the same period, data from the New York-based real estate research firm show.”

Realty Times – “Short Sale Tactics May Bring on Legal Liabilities For Agents” (7-7-10)

“Real estate agents know that short sales are likely to be time-consuming and frustrating. What many don’t know is that short sales carry high risks of legal liability for agents. One area of short sales that is fraught with liability is in the use of negotiators. In California, short sale negotiators must possess a real estate license and are subject to a variety of regulations. Moreover, a negotiator’s agency relation to the principals is frequently unclear and undisclosed. Undisclosed dual agency is a particular problem.”

Orange County Register – “O.C. builders hit by tax break’s demise” (7-7-10)

“The total number of O.C. sales contracts — the start of escrow for new home purchases — tumbled to 191, down from 218 in April, according to Costa Mesa-based Hanley Wood Market Intelligence, which tracks new home sales. May’s total was up a mere 3.8% from year-ago levels. By comparison, O.C. contracts had been up 39.7% in April. April 30 was the deadline to open escrow on a home purchase to qualify for the federal tax credit.”

Orange County Register – “Calif. has 4th largest foreclosure discount” (7-7-10)

“The company ranked of 44 states and Washington D.C. (other states don’t have enough data for valid analysis, according to Realtytrac) for the gap between pricing for homes sold somewhere in the foreclosure process vs. those that were not anywhere in foreclosure. As for fat foreclosure discounts, Ohio led the nation at 39.5%, followed by Kentucky at 35.2% and Illinois at 35.1%. The average sales price of properties nationwide that sold while in some stage of foreclosure in the first quarter was 26 percent below the average sales price of properties not in the foreclosure process.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 6/30/10

Wednesday, June 30th, 2010

In The News:

Mortgage Bankers Associations – “Mortgage Refinance Applications Increase as Rates Continue to Drop in Latest MBA Weekly Survey” (6-30-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 25, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 8.8 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 8.3 percent compared with the previous week.”

Los Angeles Times – “Foreclosure sales decline, but housing recovery still has far to go” (6-30-10)

“A total of 232,959 U.S. homes that sold in the first quarter were either bank-owned or in some stage of the foreclosure process. That’s a 14% decrease from the prior quarter and a 33% decline from a peak in the first quarter of 2009, according to Irvine-based RealtyTrac.”

Orange County Register – “Newspaper home data ’stinks’ to consultant” (6-30-10)

“If you read the newspapers, you would think prices are appreciating, whether it is the Case Shiller price index or median resale prices – the two price measures that used to be the most reliable measures. Just look at recent price trends for Southern California. According to CS, prices are up 6% in LA (includes Orange Co.) and 11% in San Diego since March of 2009. According to the median price, prices are up 12% in LA, 17% in Orange County, 12% in Riverside and 18% in San Diego since April of 2009. Neither is correct if you are talking about most homes in those markets. While we love the CS methodology, both CS and the median price are wildly impacted when the mix of what is transacting shifts dramatically from the norm.”

Orange County Registered – “A quarter of H.B. homes on market distressed” (6-30-10)

“The newest ‘market time’ for Huntington Beach, Thomas’ math that tracks theoretical time it would take to sell all listed homes at the pace of new escrows opened, is 3.95 months, compared with Orange County’s overall 3.37 months. The city’s share of its distressed properties — foreclosures or short sales — among active listings is 25.3% vs. the county’s 30.7%. And I double checked with Thomas — it’s just a coincidence that the number of deals in escrow and the number of distressed homes on the market each happen to be 169.”

Looking Back:

One year ago, prime mortgages 60 days or more past due climbed to 2.9 percent. Existing home sales increased 2.4 percent in one month. The S&P/Case-Shiller home-price index decreased 18.1 percent from 2008 to 2009.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 5/15/10

Monday, May 17th, 2010

Today’s News Synopsis:

The NAHB reports U.S. home-builder sentiment rose in May to the highest level in more than 2-1/2 years. The FDIC has shut down 72 banks so far in 2010. Based on a survey of 3,000 Western Union customers, 45% of respondents with a modified mortgage indicated scheduling regular payments will prevent re-default. According to Altera Real Estate, current housing demand has reached 2005 levels, just before the turn in the housing market.

In The News:

North Bay Business Journal – “115 agencies statewide defer impact fees” (5-17-10)

“Assembly Bill 2604 allows local governments to defer until close of escrow the collection of fees used to fund construction of public improvements or facilities. Previously, the fees had to be deferred until issuance of the certificate of occupancy or building permits, unless the funds were needed immediately or within 12 months.”

CNBC - “Homebuilder Confidence Hits 2-1/2 Year High in May” (5-17-10)

“U.S. home-builder sentiment rose in May to the highest level in more than 2-1/2 years, boosted by a homebuyer tax credit and strengthening economy, the National Association of Home Builders said on Monday. ”

Housing Wire – “Monday Morning Cup of Coffee” (5-17-10)

“Regulators shuttered four banks on Friday, located in Georgia, Illinois, Michigan and Missouri. The closures are expected to cost the Federal Deposit Insurance Corp. (FDIC) Deposit Insurance Fund (DIF) $301.5m. They bring the running 2010 total to 72 banks closed so far this year. By the same week last year, only 33 banks had been shut down.”

Housing Wire – “Western Union Sees Borrowers Take Control of Mortgage Fate” (5-17-10)

“Based on a survey of 3,000 Western Union customers, 45% of respondents with a modified mortgage indicated scheduling regular payments will prevent re-default. Almost one-third believe modifying their mortgage will improve their debt situation. But Western Union noted a need for greater borrower education in terms of loss mitigation options. For example, approximately half of respondents with a mortgage do not fully understand the requirements to qualify for modification or refinance.”

Orange County Register – “Home demand off 5% as tax break ends” (5-17-10)

“Current housing demand has reached 2005 levels, just before the turn in the housing market. Demand, the number of new pending sales over the prior month, decreased by 209 homes over the prior two weeks and now totals 3,770, a 5% drop.”

Inman - “6 ways agents avoid ‘clunker’ clients” (5-17-10)

“One of the most important steps you can take to attract more high-quality new business is to know who is a good fit for your business and who is not. Because we are still experiencing a sluggish market in most areas, it’s tempting for agents to take almost any customer who wants to buy or sell a piece of real estate. This is a poor strategy in the long run, and here’s why: When you’re willing to work with almost anyone, you often say “yes” to clients who will never close a transaction.”

Looking Back:

One year ago, the months of unsold, Bay Area inventory of existing single-family homes priced above $1 million reached 14 months. The government considered lifting the $729,750 conforming loan limit in place for high-cost markets. Builder confidence increased for two straight months in May 2009.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 3/15/10

Monday, March 15th, 2010

Today’s News Synopsis:

Builder confidence decreased by over 10 percent since the beginning of March. Sacramento home sales decreased by 26 percent from last year. According to LPS, the U.S. mortgage delinquency rate is currently at 10.25%. California contributed $2.6trn to the total $5.7trn of US housing wealth lost since the peak of 2006.

In The News:

NAHB - “Foreclosures Weigh on Builder Confidence in March” (3-15-10)

“Builder confidence in the market for newly built, single-family homes fell back two points to 15 in March as poor weather conditions and distressed property sales posed increasing challenges to both builders and buyers, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.”

Sacramento Bee – “A typical slow February for Sacramento home sales” (3-15-10)

“The Sacramento Association of Realtors reports this morning that home sales continue in their sluggish winter pattern, with 1,156 homes closing escrow during February in Sacramento County and the City of West Sacramento. February sales of existing homes were essentially flat from January, and down 26 percent from Feb. 2009, SAR reported. The median price of $179,900 was up from $170,000 in January and up 7.7 percent from Feb. 2009.”

Wall Street Journal – “Mortgage Fraud Declines but Remains Virulent” (3-15-10)

“First American CoreLogic, a real estate information supplier, compiles an index of the rate of fraud on home mortgages. A version of the index that excludes subprime loans peaked in 2007 at about 112 (on a scale that equates the early-2005 level to 100). It has since dropped to 84.”

Housing Wire – “Housing Recovery is Spelled R-E-O” (3-15-10)

“According to data from Lender Processing Services (LPS: 40.02 -1.43%), a whopping 7.4m loans are now non-current, compared to just 4.1m on average between January and June of 2008.”

Housing Wire - “Pace of Mortgage Delinquency Slowing: LPS” (3-15-10)

“The total loan delinquency rate of US mortgages is 10.25% as of January 2010 — a 2% increase from December 2009 and a 22.1% increase from January 2009, according to mortgage performance data and analytics provider Lender Processing Services (LPS: 40.02 -1.43%). Another 3.3% of foreclosure inventory brings the total non-current rate to 13.5% in January.”

Housing Wire – “In California, a Unique State of Mortgage Borrower Behavior” (3-15-10)

“The state contributed $2.6trn to the total $5.7trn of US housing wealth lost since the peak of the housing market in Q2 2006, according to US asset-backed securities research this week from Deutsche Bank.”

Bloomberg - “Housing Real-Estate Recovery Signaled as Fed Unwinds” (3-15-10)

“The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006. Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth, according to forecasts by Dean Maki, chief U.S. economist for Barclays Capital in New York.”

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