California Real Estate Headline Roundup

Posts Tagged ‘real estate’

By Bruce Norris .

The Norris Group Predicts a Significant Resurgence of California’s Real Estate Market

Monday, July 8th, 2013

The Norris Group Predicts a Significant Resurgence of California’s Real Estate Market, Soon To Be Fueled By Job Growth, Inbound Migration and Economic Recovery.

California Comeback 2: Fast Furious and DangerousNorris will present his findings Saturday, July 13, at an 8 a.m. to 5 p.m. seminar at the DoubleTree Hotel in Ontario

California’s real estate market is rapidly recovering, and it’s producing significant investment opportunities in many areas of the state.

But California’s market recovery isn’t going to last forever, and when it ends, it might come to a halt faster than most people anticipate, said Bruce Norris of The Norris Group in Riverside.

A real estate consultant, investor and educator for the past 30 years, Norris has generated a huge following based on his consistently accurate real estate forecasts, the latest of which he issued in December when he predicted that California would see a median price increase of 20 percent this year.

Norris’s latest predictions are contained in a 280-page report titled “California Comeback 2: Fast, Furious, and Dangerous,” which provides in-depth analysis and guidance for both novice and professional investors targeting California’s real estate market. Norris will present his findings during an 8 a.m. to 5 p.m. workshop, Saturday, July 13, at the DoubleTree Hotel in Ontario.

Norris’s report identifies those counties that provide the best investment opportunities. He also analyzes the various factors that affect the current and future real estate market, such as the level of government intervention and emerging trends involving unemployment, housing construction and migration of people to California. The report considers the impact of former owners coming back into California’s real estate market.

“Each county has an unprecedented number of people who were foreclosed on who are waiting to be buyers again,” Norris said. “As those buyers re-enter the market with FHA loans, they are finding greatly reduced inventory. The combination of increased demand and low inventory is driving prices upwards at a record pace.”

The report breaks down the percentage of California real estate being purchased by hedge funds and foreign investors. It also explores the possible market changes should these groups stop buying and start selling.

Norris will take a close look at the ever improving equity position of California owners and how that could impact both supply of homes available for sale and move-up buyer demand.

Norris has built a following in the real estate community and with news reporters after producing consistently accurate real estate forecasts. Norris publicly predicted the sub-prime lending and foreclosure crisis in January of 2006, more than a year before the nation’s leading economists and real estate industry analysts would even acknowledge the possibility of a downturn. Norris also correctly forecast both the real estate boom that began in 1997 and the subsequent doubling of home prices. He regularly interviews lenders, economists, builders and other housing experts on his weekly real estate radio talk show, which airs at 6 p.m. Saturdays on KTIE 590 AM in San Bernardino. Podcasts and transcripts of Norris’s radio interviews can be accessed through his company website, www.thenorrisgroup.com. Reporters seeking interviews with Norris should contact Aaron Norris at (951) 780-5856 x108.

Encouraging Words For 2013

Monday, December 31st, 2012

Nick ManfrediWow… 2012 was great. This month’s deals are flying around my friends and team like crazy! It’s very exciting to once again see the exhilaration in their eyes and hear it in their voices. I expect 2013 to be a continuation of 2012 as we maintain relationships with trustworthy investors that have buy/flip deals, and cash partners with great hearts that seek joint- venture flips or trust deed investments.

The hearts and minds of those who surround you in your business life will have the same effect as those in your personal life. If your wife is a genuine and loving person, you’re far more likely to have a successful marriage. If you surround your real estate business with genuine and loving people, you’re far more likely to experience real estate success; how blessed is the guy that has a genuine and loving wife who’s also his business partner?.

So my encouragements in 2013 would be:

1. Invest the time it will take for you to become a more genuine and caring investor. Commit yourself to liking or even loving others more than you do today and watch what happens.

2. Remember: THIS BUSINESS IS BETTER CAUGHT THAN TAUGHT. There are a few posers out there, so get in an environment where you can confirm the type of deals that interest you are “in -fact” closing. If you don’t yet have your real estate license, go get it, find a few solid investors and work with them. By working along side a few good investors, you’ll catch on fast, and your confidence will grow as you see them closing deals, and earning profits. At all costs, help them prosper while earning something for your self in wholesale fees and/or agent commissions. You’ll do well to simply focus your efforts on becoming (or remaining) the best buyer you can be. Do this for the next four years, and your cup will be full.

Good luck and God bless!

Connect with The Manfredi Group

www.ieinvestorsforum.com

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Mike Cantu Presents 2013 and Beyond

Thursday, December 20th, 2012

Mike CantuWhat is it that you’re out to accomplish? That’s the big question. Exactly, what is it? Equity, cash flow, a pile of cash? Get specific. How much and when? It’s all attainable under the great umbrella of real estate. Spend time thinking it through. This is your future. Set aside time for thinking every day. Put no limits on your imagination.

Put your business plan in writing. It belongs in your goal book. Review it every morning and night. Keep it simple. Simple, but not easy.

A good plan with the proper actions over time is all that stands between you and the life and lifestyle you want. Persistent and consistent are the key words here.

Have clay plans vs. stone plans. They’re easily remodeled and shaped to accommodate the changing market. Expect lots of changes in 2013.

There’s opportunity in every neighborhood. If there’s houses, there’s opportunity. Time and circumstances change all sellers. Good deals are made, not found.

Remember, we’re in the people business first and foremost — person to person. Secondly, we are in the real estate business. You dance with the people, not with the house.

Keep it simple. Don’t over-complicate things. It takes three things to make a deal: two humans and one property. That’s it. Keep it simple.

Make lots of offers. It’s like playing the lottery for free. The key here is to have lots of good leads. The more leads, the more offers. Any unmade offer is a ‘no.’

Take lots of action — disciplined action – and do it every day. ‘What did you do to buy a house today?’ That is a very important daily question to ask yourself. Discipline usually means doing the opposite of what you feel like doing. Achievement comes from the sum of consistent small efforts, repeated daily. The foundation of achievement is intense desire.

Keep your overhead down. Marketing and innovation produce results. All other business functions are costs.

Produce for wealth creation and accumulation. Invest profits for wealth preservation and growth. Put the magic power of compound interest to work. Save 10% of all you earn. Pay yourself first.

The best investment you will ever make is your steady increase of knowledge. Invest in yourself. I can’t put enough emphasis on the proper education. Proper is the key word. Study alone is no substitute for experience and action.

Be patient. Wait for the right property and circumstance. Patience can save you from years of damage.

When the going gets tough, ask yourself: ‘what is freedom worth?’, and then never ever give up. Most importantly, enjoy the ride — every moment of it! Remember, all we ever really have is the present moment.

So get out there, get after it, and don’t quit until you get what you came for.

Connect with Mike Cantu

www.mikecantu.com

 

The iPad as an Investing Tool

Wednesday, December 19th, 2012

Kenny Wyland, In a Day DevelopmentHi, this is Kyle and Kenny from In A Day Development. We’ve been cash flow investors, primarily focusing on rental real estate and notes, for about four years, so you could call us newbies. However, we’ve had our fingers on the pulse of technology since we could operate a keyboard. We’ve both been avid programmers since childhood, and we’ve been programming professionally for over three decades if you put both of us together.

We frequently attend investor events, and we’re always approached with questions regarding technology, web sites, software, the Internet, mobile apps, and other related topics. Though we don’t (yet) have the long decades of experience through which our teachers and mentors have developed their skills, knowledge, and expertise, we have tried hard to leverage technology in our investing.

The most frequent question we’re asked is ‘iPhone® or Android®?’ and the answer is ‘You can get great devices from either one’. If you’re thinking of getting a tablet (which we recommend), we’d recommend sticking with the one that most closely matches your phone – if you’ve got an Android phone, look into Android tablets. If the iPhone is your thing, then the iPad® is for you. Why? If you stick with the same platform, you won’t have to buy all of your apps again – as long as you use the same username, the apps you’ve purchased from the Apple® App Store or Google® Play can be installed on as many devices as you want. Also, the ways you use your Android tablet will make more sense to you if you’re used to your Android phone, and if you’re good at working your iPhone, then the learning curve when picking up the iPad is very shallow.

That said, we were early adopters of iPads, having had iPhones for several years and having written apps for both iPhones and iPads for more than three years. We both have iPads and we use their awesome capabilities in our daily lives to enhance our investing. A computer is only as good as the software installed on it, though, and here are some of our favorite apps:Kenny Wyland, In a Day Development

Sign-My-Pad and DocuSign Ink let you read and sign documents, like real estate offers, without wrestling with printers, scanners or fax machines. Aside from the simple economy of not spending money on paper and ink, we can turn our offers around much faster and get contracts signed wherever we are – the 3G/4G Internet access allows us to send, receive and do business anywhere. Even better, you can avoid hand cramps by saving signatures and initials within the app. DocuSign Ink is free, and it has available in-app purchases which unlock additional signatures for a nominal fee. Sign My Pad is $3.99 with additional signature slots available for purchase. There’s a ‘Pro’ version available for $19.99, as well.

10bii Financial Calculator is a fantastic financial calculator, inspired by the Hewlett-Packard® 10bII. This might seem like a plug for our own product, but the fact that we rely upon this app for analyzing our own deals means that we have a serious incentive to make it the very best it can be. From saved TVM (Time Value of Money) transactions to PDF amortization schedules, to a simplified uneven cash flow investing interface, to the app drawing cash flow diagrams, to the Easy Modes which work like ‘wizards’ for common calculations, we use this app every day… and so do a lot of other investors. The 10bii Financial Calculator costs $5.99.

Redfin®, Realtor.com®, Zillow® and other similar apps give us information about properties that are active, pending, or closed, and let us research our target farms and specific properties. These apps tend to be free.

Gmail is a free app from Google that lets you access your Gmail inbox, including your labels and archived mail. The built-in Mail app will let you send and receive email via Gmail as well, but the specialized Gmail app provides some extra features. It can alert you when new emails have arrived in your inbox, and it has a ton of very nice features. If you’re not a Gmail user, this app won’t do you much good, but you owe it to yourself to try it out, as it’s an excellent mail system with some fantastically innovative features.

Dropbox, Google Drive, and SugarSync are free apps that allow you to store files in the cloud so they can be accessed from anywhere. You can drop a file into your Dropbox on your desktop computer and it is available on your mobile device instantly. You can allow others access to the files to make collaboration easier or you can keep them private –, it’s up to you. In fact, we wrote this article on Google Drive so we could collaborate easily and then just share it with The Norris Group rather than sending a word processing document via email. Being ‘somewhere else’ when our files are ‘at home’ is a real pain, and so is only being able to find an old version of a document that you know you’ve done more work on these apps and their corresponding web sites (which let you upload your files from your computer, or create them right on the site in the case of Google Drive) are a key part of our technology-based investing strategy.

Google is our preferred search engine, and the free Google app for iPad is a great front-end to Google’s indispensable service. If you have a question, Google probably has the answer.

There are so many more awesome apps out there, and we’re working on more iPad apps to enhance our own investing efforts. If you think you could get at least some benefit from a tablet computer, we’d recommend getting one. On the other hand if you’ve already got one and you know of a killer app that we’ve missed, please drop us a line at TheTeam [at] InADayDevelopment.com and let us know about it.

Happy investing!

Kyle Humfeld and Kenny Wyland,
In A Day Development

Connect with In A Day Development

www.inadaydevelopment.com

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California Forecast 2013: More of the same save the black swan by Sean O’Toole

Wednesday, December 12th, 2012

Bruce Norris, The Norris GroupIn 2012, we saw the continuation of a housing recovery in California, with solid sales volumes and price increases throughout much of the state.  More importantly, short sales, loan modifications, price increases and even foreclosures helped many get our of being underwater on their homes.  Many would say this recovery is artificial.  And, while there is no question government intervention played a major role, it appears unlikely that intervention will end anytime soon; so the recovery is likely to persist-save the possibility of a black swan.

The biggest change in 2012 was the dramatic decline in foreclosure sales, and as a result, bank owned properties (REOs).  The “foreclosure wave” that many others predicted has yet to materialize in California.  Instead, over the past 12 months, notices of default plunged by 48.9 percent year-over-year, foreclosure sales fell 27.7 percent y-o-y and REO inventories declined 34.9 percent y-o-y.  While we correctly predicted that there would be no foreclosure wave, this decline was steeper and sooner than we expected.

For 2013, we largely expect more of the same.  Demand will remain strong thanks to low interest rates and affordability.  Housing supply will remain constrained, largely due to foreclosure intervention.  Prices will rise, though likely at a slower pace.  But unlike 2012, we expect sales volume will decline due to further decreases in supply.

Demand will remain relatively strong, despite structural issues

  • The Federal Reserve is clearly committed to monetary-stimulus programs that will keep mortgage interest rates at or near record lows.  Low interest rates have and will continue to positively impact demand.
  • In many parts of California, rents remain higher than payments, despite recent price increases, making housing attractive both to buyers and investors. This positive impact on demand may be offset by further price increases.
  • Early foreclosure “victims” may now qualify again for a mortgage, and choose to return to homeownership.  This new set of buyers will increase demand for scarce inventory.
  • Negatively impacting demand is the reality that homeowners with equity are not moving up at the rate they did during and before the credit bubble, and instead are hunkering down.
  • Nearly a quarter of all homeowners are underwater, owing more than their homes are worth.  While these homeowners may be able to short sell, they are typically unable to repurchase, and are forced instead to rent negatively impacting demand.
  • Demand also continues to be constrained by tighter mortgage lending standards.  Given that most mortgages are still government backed, and that the government backed entities are still struggling with losses that are blamed on loose lending standards, we don’t expect mortgage lending standards to ease anytime soon.

Supply will remain tight, with the inventory of homes for sale at record lows

  • Government intervention will continue to play a huge role in the foreclosure market.  The National Mortgage Settlement Program, the Home Affordable Modification Program (HAMP), and the California Homeowner Bill of Rights legislation that goes into effect on January 1, 2013, will all continue to put downward pressure on foreclosures and foreclosure inventory.  Foreclosures have been a significant source of supply since 2008, and these continued declines will hurt sales volume in 2013, likely dropping foreclosure supply to half the level seen in 2012.
  • Similar to the impact on demand, the hunkering down of homeowners with equity, and the inability of underwater homeowners to sell, except through short sale, will negatively impact supply.
  • Short sales will likely increase in 2013.  We believe this is the sole bright spot for housing supply.  Banks ultimately want to clean up non-performing assets, and short sales provide clear benefits to banks over foreclosing including: faster disposition, better recovery of value, less political opposition, and reduced risk of homeowner lawsuits.  That said, short sales are at risk, as the tax exemption established under the Mortgage Forgiveness Debt Relief Act of 2007 is set to expire at the end of this year.  This tax exemption allows mortgage debt forgiven by a lender in a short sale, loan modification or foreclosure to be exempt from federal taxation.  we see the risk of this occurring as low, and believe Congress will choose to extend the Act for another year.  Still short sellers and their Realtors should push to close currently pending deals before year-end, just to be safe.

Housing prices will rise, but increases will be constrained

  • Continued demand, combined with the continued constraint of supply, should result in prices continuing to rise throughout 2013, though likely more moderately than in 2012.
  • The increase in home prices will continue to be constrained by appraisals.  As bidding wars push prices beyond those supported by recent sales, getting purchase prices to appraise will continue to be a challenge.  2012 saw a willingness of buyers to bring cash to the table to overcome this issue.  Not all buyers have ability, which will make this market especially difficult for first-time buyers.
  • The increase in home prices will also be constrained by affordability and return on investment (ROI).  The key ingredient to fast rising prices in 2012, was the fact that house payments , even after taxes and insurance, were lower than rent in many areas.  This also led to very strong demand for rentals by investors seeking, and finding, high returns on their investment.  Demand from these buyers has been the critical driver behind price increases to date, but as prices rise affordability and returns drop.

Other factors in 2013

  • We believe more households will become renters in 2013, through short sales and foreclosures, than will become homeowners.  This will continue the strong demand for rentals, and continue to put upward pressure on rents throughout much of California.
  • Trustee sale investors will continue to see strong competition at the steps.  However, as prices continue to rise, they may see the large rental buyers move away from the auctions, and perhaps even California, as they seek better returns elsewhere.  This lessening of competition may help offset declines in foreclosure volume for the traditional trustee sale investor, who focuses on restoring foreclosures for homebuyers.
  • Trustee sale investors also need to be aware the FHA’s anti-flipping waiver expires on December 31, 2012, and to date there has been no announcement to extend the waiver.  In 2011, however, the announcement to extend the waiver was made on December 28, so we remain hopeful they will again extend it.  We actually believe it would be better to let the waiver expire to discourage flipping, and instead exempt trustee sale and sheriff sale purchases, which are non-market transactions and require a professional purchaser to flip the property in order to make it available to most homebuyers.
  • As the end of 2012 approaches, debate over the mortgage interest deduction is intensifying.  We believe the debate is mainly political posturing.  Many Congress members have second homes in Washington and benefit more than most from the mortgage interest deduction.  We highly doubt our elected leaders will vote against their self-interest, and when the push comes to shove, they will vote to keep the deduction.  We also think it would not be smart to do it now.  That said, we do think the mortgage interest deduction benefits banks, at the expense of homeowners by encouraging debt rather than real ownership.
  • We expect taxes to rise in 2013, more for some than others.  In addition to the unknown tax increases associated with the expiring Bush tax cuts, the Affordable Care Act will impose an estimated $260 billion in new taxes in 2013, and the passing of Proposition 30 will significantly increase taxes for higher income earners in California.  Higher taxes take money away from consumers, constraining job growth and possibly keeping a lid on demand for housing.  With higher income earners clearly being targeted, the most affluent neighborhoods are likely to be the hardest hit.

The risk of a black swan should not be overlooked

The term “black swan” comes from Fooled by Randomness by Nassim Taleb.  The idea is that rare, unexpected, events are actually the norm, and should be expected.  Today we face a number of risks that no one, including us, expects will happen.  We summarize some of these are here because we believe Mr. Taleb is right, and we should always prepare for the unexpected.

  • While hopefully resolved before the start of 2013, the so-called “Fiscal Cliff” creates real uncertainty for next year.  If Congress fails to act within the next couple of weeks, taxes will increase by an estimated $500 to $700 billion, almost certainly sending the U.S. economy into recession.  Most expect some sort of compromise, even if just pushing the issue into the future.  We are concerned the economy will tough, regardless of the outcome; and that much of the current political posturing is less about any real attempt to resolve the issue, and more about making sure the other party takes blame for what’s ahead.
  • The Middle East continues to be highly volatile.  A crisis there could send fuel prices skyrocketing; and any US involvement would also result in new spending and debt that the country can little afford.  Resulting impacts to the economy, and possibly interest rates, would not be favorable to housing.
  • The Eurozone debt crisis continues to make headlines.  In this interconnected world, it would be unwise to think that further problems there could not impact us here.
  • Something else, even more unexpected than those we’ve outlined above.

Despite the risks, government intervention, higher taxes, and the other issues that keep up at night, we remain relatively bullish on the housing market for 2013.  We have little doubt that fewer people will be underwater by the end of the year, and that housing will have proven a relatively safer investment than entrusting your money elsewhere.

And no, there will still not be a wave of foreclosures.

Connect with Sean O’Toole

www.ForeclosureRadar.com or

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See also Sean’s TNG profile page with links to all the radio shows including those for I Survived Real Estate.

Real Estate Analyst Predicts A 20 Percent Increase In Median Home Prices In California During The Next Year

Monday, December 10th, 2012

Bruce Norris, The Norris GroupRIVERSIDE, Calif., Dec. 10, 2012 – Remember the days when residential real estate gained equity each year?

It’s happening again in California, and a year from now homeowners could see as much as a 20 percent increase in the median price of homes across the state, according to Bruce Norris, a Riverside-based real estate analyst and principal of The Norris Group.

“My best guess is that California we will have significant price inflation. Prices could escalate so strongly that we will think we are in 2004 instead of 2013.”

Some may ask how this is possible.

But Norris has experience predicting the unpredictable.

A real estate consultant, investor and educator for the past 30 years, Norris publicly predicted the current sub-prime lending and foreclosure crisis in January of 2006, more than a year before the nation’s leading economists and real estate industry analysts would even acknowledge the possibility of a downturn. Norris also correctly forecast both the real estate boom that began in 1997 and the subsequent doubling of home prices.

Norris now says he has identified three reasons why median home prices in California will go up.

For starters, he said, policy decisions have resulted in record low inventory levels.

“In many areas,” Norris said, “there’s one month of inventory. Inside of that one month of inventory are very few REOs and a lot of short sales that may or may not really be available to buy and close anytime soon. The properties that would normally be purchased by owner occupants are being snapped up by billion dollar hedge funds. These hedge funds, unlike the smaller investor types, are keeping all of the properties as rentals. There’s a little inventory for sale by ‘normal sellers with equity,’ but, right on cue they are getting the idea their property just might be worth more than the last sale.”

With the absence of inventory, Norris predicts, prices will escalate.

A second factor paving the way for the rise in median home prices in California is the return of the former homeowner who was foreclosed on in 2008 and 2009.

“The numbers of trustee sales in those years were staggering,” Norris said, adding, “As a percentage of whatever had happened in the past, 2008 and 2009 will go down in history as the California Real Estate Collapse of all time. The numbers differ across the state but the percentages are similar. In San Bernardino, the numbers of foreclosures exceeded the number of sales in 2008 and 2009. Fast forward to 2012 and you now have those same people ready and capable of buying a home again.”

So, how is it these people can buy homes so soon after going through a foreclosure? The answer, Norris says, resides with FHA, which will now make a loan to a buyer who lost their home via foreclosure after three years. “Buyers have realized that their house payment would be less than their rent, and that’s fueling demand and pushing up home prices,” he said.

The third factor setting the stage for a significant increase in median home prices is interest rates. “Interest rates are at all-time lows, and that allows for price increases to take place without significantly increasing mortgage payments,” Norris said, adding that he expects California’s median prices to up by as much as 20 percent during the coming year.

Norris plans to share the results of his findings Tuesday, Dec. 11, during an 7 to 9 p.m. workshop at the San Diego Creative Investors Association meeting at the Scottish Right Center in San Diego. See The Norris Group calendar for other “Poised to Pop” speaking engagements all over California.

Reporters wishing to schedule an interview with Bruce Norris in advance of next Tuesday’s presentation should contact Aaron Norris at (951) 780-5856 .

For more information about the Dec. 11 workshop or to learn more about Bruce Norris and The Norris Group or to access to podcasts of Norris’s weekly radio interviews with lenders, economists, builders and other housing experts, visit www.thenorrisgroup.com.

Using the Auction Method as an Alternative to Selling Houses

Tuesday, October 30th, 2012

Randy Grigg


Randy Grigg

Elite Auctions

(Full Bio)

 

Connect with Randy & Mike Grigg

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Selling by auction has several advantages over other methods if the process is done right.

Elite Auctions recently celebrated its 10-year anniversary of selling our own fixed-up houses, and assisting other flippers to sell their inventory.  As President, I can tell you we made a lot of mistakes in the early days.  Today, we think we have a well-oiled system for selling property efficiently.  We continue, however, to try and improve, as the “cheese” is moving all the time.

For basic background info, I’ve been involved in the real estate game for 35 years now. For the first 23 years, I was accumulating single-family houses for cash flow.  Twelve years ago, I stopped buying houses for investment because my wife and I had enough income to support our lifestyle.  Now, for the past 12 years, our company’s focus has been buying and selling houses as well as conducting onsite auctions.

When I started, all houses were turned over to the best Realtor® in town to sell. The average time, however, to find a qualified buyer who actually closed seemed excessive.  Many of the escrows fell apart because of contingencies.  The buyer always got their deposit back regardless of the reason because I couldn’t move on without canceling the current escrow, and the escrow company held the deposit.  So instead of having a two-month holding period after fix-up, many times it took four months or so to actually close — often with two to three different “pre-qualified” buyers.

When I saw the benefits of using an onsite auction for selling, the process helped take the guesswork away from the critical holding period where costs accumulate on a daily basis. Our auction contract, which the buyers sign, is much different than the standard “pro-buyer” California (CAR) contract.  The buyer purchases “as is” with no contingencies, and he or she relinquishes a large, nonrefundable deposit which is deposited into our trust account — not in a “negotiable” escrow account. It seems fair to me that when we own the property, we should be able to dictate the terms — whether it’s renting to a tenant or selling a rehab.

When we started selling by auction, all our rehabs were sold using an absolute auction (no minimum bid / no seller reserve).  After using my houses as guinea pigs and selling substantially below value, we were forced to learn how to market more effectively, how to talk to potential bidders, and how to create a “feeding frenzy” with buyers.

In the early days, we sold seven houses and a fourplex for a very savvy investor — all absolute with no reserve because he preferred this type of auction and trusted our system to get the highest price possible.  In Kentucky and other midwestern and eastern states, an auction isn’t an auction unless it’s absolute without reserve.  Basically our auctioneer friend in Kentucky tells us that about half of the sellers call him to sell their property absolute and the other half sell traditionally with a Realtor® through the MLS.  He tells us no one would show up if there was a minimum bid or reserve!

California hasn’t caught on to using auctions to sell its own houses, but many Californians love to buy at auction…oftentimes paying way too much.  You see, a well-orchestrated/advertised auction will benefit the seller, not the buyer. Even Trustee Sales, that in times past were held on the courthouse steps using a monotone bid caller, are now switching to a live auction format in a hotel with ringmen and a low starting bid to build momentum and competition.

About three months ago, we attended a Trustee Sale held at the Marriot to see if we could get a deal, and because we were curious about the auction company’s format.  We had our numbers calculated for all 15 houses and enough cashier’s checks to buy the two most expensive properties. Needless to say, we didn’t buy one – not even the trashed ones.  Overall, the price at auction was an average of 28% higher than we were willing to pay…RETAIL!  Just to make sure this wasn’t a fluke, we attended two more Trustee Auctions… but yes, the results were the same.

Hopefully, you see that auctions can be better for sellers than buyers.

A side note, however: right after the market crashed and there were a ton of bank-owned properties (2008-2010), we bought several houses at ballroom auctions just because the ratio of bidders to houses was much less.  We turned and sold them all onsite by auction using our company, and did quite well. TIMING is everything and the cheese is always in motion.

Next blog, I’ll discuss the best timing and the best properties to sell by auction, along with comparisons of selling by listing through the MLS vs selling by an onsite live auction.

Until next post…

 

 

Bruce Norris of The Norris Group will be at the OCRE Forum at the Chinese Cultural Center in Riverside on Wednesday, November 7, 2012.

 

The Norris Group will be holding their Distressed Property Boot Camp from January 29-31, 2012.


Six Steps To Consistently Winning The Real Estate Game In Any Economy by Tony Alvarez

Thursday, September 27th, 2012

Tony Alvarez


Tony Alvarez

Investor and REO Mentor

(Full Bio)

 

Connect with
Tony Alvarez

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Or thereomentor.com

Just as the Law of Cause and Effect is a natural law which can never be broken, never before have the basic fundamentals of playing the real estate game been so vitally important to your success.  Here are six fundamental steps that I have found vital to continued success in this present real estate market.

1. How much do you know and how experienced are you?

Assume you know NOTHING about the real estate game every morning when you awaken!

Starting your day believing you know exactly what to do and when to do it (just because it worked for you last year, last month or last week) is just NOT the best way of playing the real estate game these days. Ignorance may not be bliss, but it is definitely a more helpful mindset to assure you will be open-minded and prepared enough for whatever is heading your way.

Action Step #1   It does not matter how well you’ve done, you are still only as successful as your last deal. Seek the guidance and company of players who have survived prior games, honed their skills by trial and error,  and who have earned the right to continue playing (and winning) in today’s real estate market.

2. Know your target market thoroughly!

No matter how many times I jump up and down telling people that they need to spend time learning their target market before they actually go out and start making offers, writing checks, or chasing deals, very few ever listen to my suggestion.  This is the equivalent of going out to buy a car without ever doing any research on any of the statistics about the past performance of the vehicle.  That’s the way I used to buy a car when I was young.  I’d see somebody driving something I liked and immediately I had to have one too!

So off I’d go to find and buy my new dream car at the first dealer I found; hardly ever negotiating on price, as long as they had the right color.  There’s just no other way for me to say this:  buying real estate in any area where you are not thoroughly aware of what’s going on in that market is just plain stupid!

Action step #2   Choose a specific target market, whether it’s a local city that is easy and convenient for you to physically travel to, or one which is located out of state.  It doesn’t matter to me where or how you decide to invest as long as you study that specific market and know it better than anyone else.  The deeper your  understanding of the elements that comprise your chosen  real estate market, the higher the probability of your ultimate success. 

3. Keep one eye on the broader national events and both eyes on your local news. Learn to interpret the daily news.

Today it’s not just enough to read newspaper and Internet articles, you must learn to interpret exactly what you’re reading.  Every writer has a perspective, just as every newspaper has an agenda.  You must understand the source of the articles and their political leaning.  Unfortunately, this is the world we live in today.

Action Step #3   Read at least three articles from different sources daily. Pick a source that writes for and services a broader audience, more than just the real estate community. This will give you a better chance of finding objective articles that at least try to give you both sides of the story.  Although we research over 52 different sources daily and I read articles from both sides of the political aisle, my favorite is still The Wall Street Journal.

4.  Develop a simple plan that is both easy-to-understand and implement, which will get you to the money you want or need to make with ease.

Every time I speak at an investor club, invariably there’s always more than one person in the audience ready to tell me about their new multiphase, untold-streams-of-income-generating, newfangled, surefire-millionaire-making  “How to Get Rich with Real Estate” plan (which of course hasn’t produced one penny for them YET).  It’s amazing how many ways there are to invest in real estate and how many methods people come up with to take advantage of different segments of the real estate market.  Honestly, I’m just not that bright or greedy, which I think is at the center of what helped me become hugely successful very quickly.  My limitation of not being able to handle multitasking was actually my salvation in becoming financially free.  I sincerely cannot handle too many things at one time.  One thing at a time is about as complex as it gets for my brain.

For example, I basically focus on buying smaller, average-quality-built, 2-to-3 bedroom, 1-to-2 bath houses, which are approximately 1000 to 1500 sq. ft., and from two to four residential incomplete units, generally built from 1950s to 1990s.  My goals are to purchase one per week, to sell at least one property per month, and to keep one or two as rental properties.  I try to buy at 50 to 60% of present market value, and my goal is to refinance the ones I keep within a six-month period.  My goal when I refinance them is to remove 100% of my investment dollars from property and still have at least a $100 monthly net income/cash flow after all expenses have been paid.

Do I always accomplish my goal?  Of course not!  This works about 50% of the time; the other times I end up with a little bit of my money still invested in each property. That’s okay with me as long as it doesn’t suck up all my available cash. I have some friends that buy houses like I do; others focus on locking up multi-residential units (apartments) at solid Cap Rates. Some hate the risk of owning, and just control a ton of real estate with Lease Options and Master Lease-type contracts FOR ENORMOUS MONTHLY CASH FLOW.  Still others hate to sign on the dotted line for bank financing, and focus instead on buying directly from owners/sellers with exceptional flexible seller financing. I really don’t care how you decide to get wealthy in this business. However, I do care that you find an easily-repeatable method that consistently puts cash flow into your bank account monthly!

Action Step #4   Find what you love to do in real estate, or maybe just find what is presently working for someone else, and MAKE SURE IT WORKS! Improve on it if you want. Then, do it a lot!

5. Fact:  a plan without daily systems is as useless as a car without gas.

What good is it, but to just look at and dream of what you could do with it?  In order to make anything happen, well, YOU have to MAKE IT HAPPEN!  Yes, timing helps, favorable financing helps, easy-to-find, low-priced properties (as in plentiful REO’s, Short Sales, FSBOs) help. Even your wife or husband being an experienced General Contractor will help.  Believe me, however, there is NOTHING — absolutely NOTHING — that can keep a determined individual from reaching the place he or she sets his mind to reach as long as they START walking in the direction of what they choose to achieve.  Simple Daily Action Steps are the true secret to accomplishing anything worthwhile. There is no other secret to success.

Action Step #5   Sit down and write out a series of daily action steps that YOU MUST take every day without fail. Each must be directly related to accomplishing a very important task and soliciting a very specific response, and it must be quantifiable /measurable.

6. Are goals and results important to your ultimate success?  Or are they sometimes limiting? Results are important in everything we do.

They are the yard stick by which all success is measured. Whether in sports, the military, or business, anticipated results are the driving force behind most, if not all, decision-making.  However, focusing all of our attention on the anticipated results can sometimes increase our concern or elation about imaginary outcomes which are not only unrealistic, but may limit our response in the present.  The best example of this that I can give you has to do with my original goal back in 1995 when I first decided to start investing in real estate in the Antelope Valley,  just after going through bankruptcy.  I set goals to buy 10 single-family homes, rent them, eventually pay them off, and then someday, each of those homes would be worth $100,000 in value. This meant that I would ultimately end up with $1 million net worth as well as $10,000 a month income.  Did that happen? Did I accomplish my goal?  The truth is that by the end of the 10th year, I ended up with ten times more money than I ever imagined I would.  This taught me a huge lesson and helped me to understand that sometimes our goals can be somewhat limiting; sometimes, if not always, the level of success that we as individuals are capable of achieving lies way beyond our present ability to imagine.

Action Step# 6   Set a goal; make it real and important to YOU. Know the “why” behind achieving it. Write it down in as much detail or as briefly as you deem necessary. Then try very hard NOT to dwell on it at all. Don’t waste a moment of your precious time re-reading it for fear of forgetting your direction. Keep ALL of your attention on the DOING!  Stay ENTIRELY FOCUSED on the DOING! Do the things you MUST DO DAILY, and forget about results. And someday you may awaken to find that your results have surpassed  all your imagined outcomes tenfold.

Tony Alvarez is teaching How to Become a Real Estate Hit Man in 2012! for North San Diego Real Estate Investors Association Saturday, September 29th. There is a special discount for this weekend NOT listed on the website. Call Denise at 714-828-8220 for details. 

Vice President and Chief Economist of CAR Leslie Appleton-Young Joins Bruce Norris on the Real Estate Radio Show #281

Friday, June 8th, 2012


Vice President of C.A.R.


(Full Bio)


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This week Bruce Norris joined once again by Leslie Appleton-Young. Leslie is vice-president and chief economist for the California Association of Realtors, a statewide trade organization with over 150,000 members dedicated to advancement of professionalism in real estate. Leslie directs the activities of the association’s member information group. She oversees the analysis of the housing market and brokerage industry trends, member communication, and membership development activities. She also is closely involved in the association’s strategic planning efforts and is a well-known speaker in California.

One of the things Bruce has noticed that has been on the increase is the percentage of equity sellers. This is probably a very significant development because in a way that is an acknowledgement that they are not going to see 2006 prices any way soon. It is an embracing reality and also recognizing that whatever they are going to do next in real estate is a good time to do it. If you are selling today and trading up, you are going to be fine. If you are trading down and possibly dealing with some other investment property, there are a lot of things you can do to get the advantage of the positives in this market, even though you are selling at a price that a few years ago you would have been somewhat disappointed in. When you are buying in the same market, you might ask yourself what the big deal is. People have a lot of emotional attachment as was noted in last week’s radio segment. You have almost 30% of the mortgages in California underwater, so people are in distress and many stuck right now.

Bruce wondered how different the reasons are for people buying in 2012 than in 2006. Leslie said you have more first-time buyers, and you have a little bit more of the trade-up situation going on because those equity sellers have finally realized this is not such a bad time and are going to jump on it. If you look back in 2006 and 2007, it was really a market dominated by REO purchasers and larger and smaller investors. It was more of a situation where certain prices were so low they were going to buy as many as they could and do their business model that way. When you look at the market today, it is much more balanced. It depends on the area. If you look at the sales that closed escrow in April, 58% were equity sales, about 22+% were REO, and about 19.4% were short sales. Therefore, you have a little bit of a balance between short and REO; it is a little bit more on the REO side while the rest are equity sales. When we first started to come out of the bottom, the REO market was well over 50% in many areas and likely close to that statewide as well. We certainly have over the past several years whittled down on at least the available inventory of REOs to the extent that now you have a two month supply, even less in some areas, of REO inventory.

One of the things mentioned in the first segment was shadow inventory. FHA has approximately 41,000 REOs right now, but they have over 700,000 people that are 90 days late. Fannie and Freddie have similar stories, and the loan mods have similar percentages. Bruce wondered what will happen with this inventory, if they are just going to really dole it out over time or take it to the sidelines as rentals. Leslie said they will most likely keep doing what they have been doing, which is to dole it out over time since this is the only thing that really makes sense for them in terms of managing their balance sheet and recognizing the losses on those assets. What is interesting is that it seems like almost every year, not including the last year or two; people would have a date set. They would ask questions like if they heard that on September 15 all of the banks are going to dump all of the foreclosed properties in one day. This never happened, and it will not happen. However, we still cannot say that this problem will not be with us for quite some time, possible 4-5 years in some areas. There is no magic bullet here; it is really one property or loan at a time. The impact of various programs will ebb and flow, but it takes time for the lenders to work through each and every one of these, and it is going to define our market for a while. Every year the market seems to be a little bit different, and certainly this market with fairly robust sales for six months in a row is showing that people are able to be more responsive today to the advantages of the market.

Bruce wondered what percentage of these sales investors are buying. Leslie said the investor sales in California are probably over 20%. In some areas they are significantly higher. All cash purchases have been about 25%. NAR had a number that was in excess of 30% a couple months ago. There are non-investors who are paying all cash for homes, but it is a very significant part of the market. About 80% of them are investing to rent, and possibly the other 20 are reselling, flipping, fixing them up, and selling them. However, this will vary by market.

What is interesting is we have had a big recession, and if you look at household formation, it really didn’t happen. We are way behind on household formation, and at some point the echo boom generation is going to play catch-up. You will see an article from time to time talking about the coming housing boom. When you look at the lifestyle choices that the generation has had to make given how lackluster the job opportunities have been and the doubling and tripling of families, at some point they are going to have the income and the job market is going to be conducive for them to break through or break free and enter the housing market. New construction was just hit very hard and has started to come up the last couple years, but it is still well below the 200,000+ units we need a year to house everybody. Things will be changing, but as long as the economy is as challenged as it is with the euro zone and Japan and India slowing, there are a lot of global trends that will impact our economy and our financial environment.

Things are either a lot more confusing than Bruce ever acknowledged, or it is more confusing than it ever has been. Leslie said she believes it is the latter and recognition of the impact of all these forces outside of our control is more heightened than ever. Mark Zhandi came out with an article that said the GDP is really dependent on the end result of Greece. Some people when hearing this might think that Greece is the size of Rhode Island, so how would it have that big of an impact. It is a little frustrating for Bruce as a local investor in Riverside that he has to pay attention to a lot of things outside of real estate and outside of our country. The financial community is a global community, and everyone is a player. Everyone is exposed to Greek debt and the Euro Zone. With all of that the financial crisis was a real wakeup call that it is not just about me in my little area, but you are directly impacted by what goes on overseas. It really is overwhelming.

Mark Zhandi also said we sometimes have the tendency to create today’s policy to solve yesterday’s crisis. Leslie said she heard him speak in D.C. a couple weeks ago, and he was right on target with comments like this. We are dealing with Dodd-Frank and qualified residential mortgage as if that is going to really be a game changer, and it is not. A lot of requirements for that loan is not necessary. Leslie said it will be a game changer in a very negative direction. One of the things Leslie said she has been concerned about is in order for a mortgage to qualify, the loan needs to have 20% down. You look at the last ten years of what the GSEs have purchased, and less than 15% would have qualified as a QRM under this definition. It is very restrictive, and the data shows that the difference the delinquencies and foreclosures for 10%, 15%, and 20% down are not that different. To focus on 20% is really going to be a burden for a lot of first-time home buyers.

There are a lot of policy implications tied up into what was most likely a real attempt to not let that happen again. However, the pendulum always swings too far in either direction. The timing of this is really not the best, and we don’t need to have the most restrictive lending policy when we have the affordability that is at all-time highs. When you can actually buy something and reduce your cost as opposed to rent, you would think that would be good idea to be more aggressive as a lender than less. There are so many people who, if they could, would just a straight refi that would take them down from 7% to 4%. They would then be able to stay in their home, so Leslie does not understand why this would not be a doable thing. There is really no difference since you are already in the position of 140% LTV, so you might as well be at a 140% LTV with a loan that somebody is going to make a payment on that you can afford. We saw in the San Fernando Valley in the ‘90s that people stayed in their communities even when they were underwater. It is not a completely rational profit utility maximizing decision when people look at their home in their community.

Bruce asked Leslie if she thinks Fannie and Freddie will not exist in ten years. This was the impression the GSEs gave Bruce and Sean O’Toole when they spoke in front of them in D.C. Leslie thinks this message has been sent loud and clear. If you looked at the white paper that the FHFA came out with earlier, you would see that this year they essentially said as much. However, the question is if it is a new entity or a combined entity, and what does it do if it is backstops. There are a lot of unanswered questions that have just not been fleshed out yet, and it is going to take a couple of years for them to do that. However, there is enough possibility of major change in which we all need to be involved. If you look at the mortgage market today, you see that last year well over 90% of the loans originated in United States for home were Fannie Mae, Freddie Mac, or FHA. That is just the way the market is, so the first-pass argument is that whatever you are going to do, don’t do it now. We have an industry and economy that is trying to get back on its feet. Looking longer term, Leslie did not think there was any doubt that there are changes that should, could, and will be made. The point is to do it in a reasoned fashion so that you avoid as much as you can, both pitfalls and distress, that is going to take the economy back where we don’t want it to go.

Bruce thinks one of the things that is going to happen in 2013 is we are going to have to get serious about generating some revenue and increasing taxes. Bruce wondered if Leslie fears that real estate would be one of the obvious targets for some of the policy changes. Leslie said she had the opportunity to go back with her leadership team a couple months ago, walk the halls, and go in and talk to the California Congressional Delegation. Without a doubt there is support for the mortgage interest deduction and a general feeling that this is not a time to mess with housing since it needs to get back on its feet. If and when a major effort at tax reform begins, likely after the election, everything is going to need to be on the table. Leslie said they were told this a couple of times by people who were very sympathetic. The thought was if we take the mortgage interest off, then somebody else is going to their thing off while another is going to take their thing off until pretty soon nothing is going to be on the table. Being realistic about it, everything is going to be on the table, and we will just have to see how things go.

The majority of the California Congressional Delegation has signed on to a resolution that has been passed around for the last two years supporting the mortgage interest deduction as it currently exists. However, if you recall what happened in 1986, you had a midnight deadline for a 3,000 page bill, and there is a timeline where people sign on and you see the mortgage interest deduction get capped at $1 million. It is hard to updo an affordable housing argument against that kind of cap, but it does also leave open the door for further reductions down the line. Leslie said they will be watching this and participating in these discussions with great interest.

When it comes to topics such as Proposition 13, Leslie said she cannot imagine a time that this will be looked at in a realistic fashion to change. It is too much a part of the landscape, and the lore. The public support for Prop 13 is quite strong, and we have a budget in Sacramento that does not hold together for this year or for the foreseeable future. There are commitments made in terms of pensions and medical support that are going to require an increase in taxes, higher revenue, or a reduction in those benefits. It is not going to be for the faint of heart to watch that process going forward because everybody has something to protect. The bottom line is we are going to have to keep cutting back until we can afford what we are doing. Fiscal responsibility is extremely important.

One thing the real estate boom did was provide a lot of revenue that did not exist prior. It looks like we figured out that more revenue does not necessarily solve the problems. We now have a dearth of revenue, but if we are trying to get new revenue sources then this is not really the solution. We really have to go to where the cuts are, which is happening. You are seeing cuts, and you will continue to see more and more cuts. There is a structural issue with respect to the commitments the state has made and what it is legally required to do since it cannot file for bankruptcy. The local municipalities can though, which is what makes Chapter 9 bankruptcy an interesting study. We have seen this in Vallejo and a few other cities. Michael Lewis released a book titled Boomerang in which the last chapter is actually about San Jose and what they are facing with expenditures that were related to an economy that disappeared and that promises that were made to public sector employees are now the bulk of their budget. Hopefully some lessons have been learned, but we are going to have to find our way out of it. This will most likely come with a mixture of cuts and revenue, but it is going to have to be primarily cuts. This is why Bruce believes real estate will not leave the table unscathed. Hopefully they will leave some things that are important. We had quite a price decline, so possibly a reduction in the amount of interest as far as up to a certain dollar amount would not be the end of the world at this point.

Another interesting topic is mortgage settlement for the California market. Bruce wondered which would be likely to occur: $12 billion for write-downs or short sales. Are people looking at reductions with this $12 billion? Leslie said she does not really know since she has not been following this that closely over the last month or two. She has not really seen much in the press about what they are doing. The initial reaction was it was great, but in California it really is a drop in the bucket. She has not read anything that has been an update on where it is all going. Bruce said he thinks he knows where it is earmarked to go, but Leslie said it is probably too early in the game and the process to have really seen an outcome yet. On the city of Riverside’s foreclosure task force, it is anticipating knowing what kinds of funds are going to be available and for what purpose. As of now, they really don’t know. Leslie said it is hard to get even a little cynical after the last five years when you hear about a new program that is going to do one thing, but only ends up doing a tiny part of it. This is not very successful.

Bruce wondered what percentage of the market now is first-time home buyers. He knew it got down to about 37%, although Leslie said it is at about 40%. She said they were going to have their annual market survey in the field next month, and this is really the data that she looks at the most and has the longest time trend on. They recently just completed a homebuyer survey, and about 47% of the people in that example were first-time buyers. Therefore, this is probably the general ballpark. If we had more inventory, it would probably be higher.

Bruce also wondered how the membership is holding up and what the mood is like. Leslie said membership peaked in 2006 at 211,000 realtors this year. She said they are going to come in at about 158,000, which is awfully good considering what has gone on in the market and the percentage of the business done by a smaller subset of agents. All that being said, they really are very busy, very engaged, and they are encouraged by the market fundamentals. This is to say after 4-5 years, there is definitely a new mood of positivity.

To find out more about Leslie’s business and any updates, go to www.car.org.

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.