Real Estate Education from Granite Real Estate Investment Club » real estate club news

San Jose Real Estate Investors Market Update: Meeting Presentation

admin — Tue, 05 Apr 2011 05:38:05 +0000

March Meeting Presentation Replay available now. Check out Don Mitchell, with fabulous insights on the market in San Jose and surrounding areas. Available for a limited time. Join us for our next meeting here.

US Banking on Equity Share – Loan Mods Dead

admin — Tue, 15 Mar 2011 11:55:55 +0000

The mortgage mess and its fallout isn’t bad enough. Now you have to split your equity with the bank? In a new scenario being proposed, the homeowner would also agree to split 50 percent of the net proceeds of any future sale of the property with the lender. The new arrangement would also include a buyout provision, so that if the homeowner ever wanted to take over the lender’s share, he would simply pay the lender a predetermined amount of cash. This is the new way. Loan modification is the old way.

So they say, equity-sharing would be a boon for everyone involved. Homeowners could stay in their houses and preserve their credit (assuming they stay current on the new loan). The neighborhood would avoid a foreclosure, which can depress property values. And the lender or investor could participate in the upside potential when the house eventually sells. Best of all, it wouldn’t cost taxpayers a dime.

A major reason the mortgage mess has gone on so long is that homeowners, lenders and investors assume their interests are at odds. An equity-sharing arrangement would bring all three onto the same side — and help solve America’s foreclosure crisis.

If you have any comments, let us know. For the full article in the New York Times, go here

http://www.nytimes.com/2011/01/06/opinion/06perriello.html?_r=1

30 Year Mortgage Going Away

admin — Mon, 07 Mar 2011 16:08:44 +0000

According to an article in the New York Times today, the Government seems least likely to maintain a final set of benefits — leniencies in loan terms that taxpayers effectively have subsidized for borrowers. This may mean the end of the 30 year mortgage as we know.

Many lenders may take the markets of the mortgage and privatize them.

Proponents of a private market want the government gradually to withdraw its support, allowing investors to regain confidence. They argue that interest rates would eventually settle into roughly the same patterns that held before the financial crisis.

Some supporters of government backing also like the idea, believing that it will demonstrate the need for a backstop.

“One of the reasons that American housing finance is in such bad shape right now is the 30-year mortgage,” he said, noting that such loans are not available in most countries. “For many people, it’s not at all clear that that’s the best product.” says Susan Wachter, a real estate professor at the University of Pennsylvania. She also said “a new government guarantee was needed to preserve a homogenous market.”

Interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than the coveted customers in the suburbs.

Lenders could charge fees for popular features now taken for granted, like the ability to “lock in” an interest rate weeks or months before taking out a loan.

Life without Fannie and Freddie is the rare goal shared by the Obama administration and House Republicans, although it will not happen soon. Congress must agree on a plan, which could take years, and then the market must be weaned slowly from dependence on the companies and the financial backing they provide.

To read more about the article go here http://www.nytimes.com/2011/03/04/business/04housing.html?pagewanted=1&_r=1&partner=rss&emc=rss.

Let us know your thoughts by leaving a comment below.

Senate Passes Homebuyer Tax Credit Extension

admin — Fri, 18 Jun 2010 23:42:36 +0000

The Senate has passed a bill to give homebuyers another three months to close on their homes and receive tax credits up to $8,000. The Tax Extenders Bill would apply to homebuyers who met the April 30, 2010 deadline with a signed contract to purchase a new or existing primary residence. The amendment would extend the deadline to September 30, 2010 for homebuyers to close on their real estate transaction. The previous deadline was June 30, 2010. The bill now goes to the House of Representatives, where it is expected to pass.

The National Association of Realtors estimates that as many as 180,000 homebuyers have qualified for the tax credit and met the contract deadline of April 30, 2010, but might not be able to close their transaction by the June 30, 2010 deadline due to the sheer volume of loan applications in the pipeline.

At this point many homes are selling quickly in Santa Clara County, but this should help to create some more momentum in the industry and get some loans closed.

ABC News thinks Real Estate Investors Vultures or Not?

admin — Tue, 28 Jul 2009 17:21:35 +0000

One of my most admired Real Estate Investor associates, Bruce Norris, was interviewed by ABC News. ABC could not believe that we Real Estate Investors who go out and buy abandoned, ugly houses, fix them up and rehab properties and then rent them for long term wealth. Hummm….sounds pretty natural to me, I’ve been doing this for over twelve years . A great interview to watch and I’m giving you the exclusive interview below. Check out the face on the news anchor woman when she sees beautiful granite counter kitchen tops as the ‘after’ picture of the rehab when she just came out of a previous buy which is a total dump…

Leave some comments and tell me about reactions you have received from naysayers after you rehab’d a property and showed people the beautiful after effects of a rehab.

So, are real estate investors “vultures” who purchase properties at a deep discount, only to rehab them and rent/sell for profit. Hit me up with your thoughts.

San Jose, CA Rents On Decline…But the Best time to buy?

admin — Fri, 17 Jul 2009 23:48:43 +0000

A recent nationwide study of rents and occupancy, conducted by RealFacts
for 2Q09, reveal that renters are showing resistance to paying a premium
to rent an apartment in a high-end market.

Rents were in decline in every market nationwide in the current quarter
with the exception of a few modest increases in Tampa-St Petersburg, FL at
1.2%; Kansas City, MO at 0.7% and San Antonio, TX at 0.6%. On average,
asking rents are down nationwide in the second quarter of 2009 from
$968/mo.over first quarter at $978/mo. The markets that were hit the
hardest this quarter are high-end markets such as those found in the
Golden State. The San Francisco Bay Area, usually ranked as the most
expensive place to live in the country lost some of its luster this
quarter. The current quarter’s decline comes upon the heels of similar
losses sustained in 1Q09.

The San Jose MSA posted the greatest decline for the current quarter at
-3.8%, followed by San Francisco at -2.7% and Austin, Texas at -2.4%.
Other struggling markets are Oxnard-Thousand Oaks at -1.8%; Riverside-San
Bernardino, CA at -1.8% and Los Angeles at -1.6%. With the exception of
Austin, TX what these markets have in common is that they are located in
California and their average rental rates are over $1,000.00/mo.
The RealFacts survey demonstrates the effects of higher than average
unemployment statistics in the state of California. According to a May
2009 survey released by the EDD, California’s unemployment now stands at
11.5%, compared to the National average of 9.4%. The San Francisco
Business Times reported that the San Francisco Bay Area has lost 130,000
jobs from May 2008 to May 2009. Companies such as Yahoo! Inc.,
headquartered in Silicon Valley have had to make cuts of about 10% of its
regular staffers.

On the brighter side of the rental markets are the current occupancy
rates. The rate at which occupancy has been declining in the past two
quarters has slowed down in the second quarter of 2009. This suggests that
asking rents are beginning to reflect what the market can bear. For
example, in Oxnard California, the average rent went from $1551/mo. down
to $1,473/mo. But the occupancy rate actually increased by nearly 1.0% in
this same quarter. Other markets that posted positive absorption this
quarter were Orlando, FL, 0.6%, San Francisco, 0.4% and San Jose at 0.3%.
All other markets were down. The highest drop in occupancy for the quarter
was found in Boise, ID at -3.2%, Oaklahoma City, OK at -2.1% and
Indianapolis, IN at -1.4%.

It’s seems today’s renter is looking for a bargain. There aren’t enough
high income renters with good credit to commit to premium rents prevalent
in high-end markets. Many renters have been forced out of high markets due
to lack of employment opportunities or sufficient income. In some cases
these renters decide to move to a location where housing is less expensive
and where they can rent the same quality apartment unit for less than half
the price.

Source: Real Facts

Evidence That US Housing Has Hit A Price Floor

admin — Fri, 26 Jun 2009 19:29:36 +0000

I read this the other day that the Real Estate Markets are headed for a rebound. I think there is some merit in this. Hit us up below with your comments and feedback. Let’s take a poll after you read this.

If you are a r eal estate investor, one of the most important questions on your mind is when the housing market will hit bottom. According to Andrew Waite, publisher of Personal Real Estate Investor, some markets like the West Coast have already bottomed and will start swinging upward in the fall. To learn why see the following article by Don Miller of Money Morning.

The U.S. housing market has been the epicenter of the global financial crisis. And many analysts believe that by watching it, investors will be able to better predict an economic recovery.

Unfortunately, because housing market data is an amalgam of a wide range of local markets, it is notoriously difficult to follow.

“It’s like a weatherman who combines conditions in Nome , Alaska and Clearwater , Florida and issues an “average” national forecast of 45 degrees,” says Andrew Waite, a former institutional investor who is now the publisher of a magazine focusing on real estate investing. “Real estate markets are by their very nature ‘hyper-local.’ Averages simply don’t apply.”

Waite is the publisher of the Personal Real Estate Investor, a magazine for investors who buy houses or condos to manage for income or to fix up and sell for a profit.

The housing market is too fractionalized to put a finger on an “average” price, Waite says. Real estate is segmented by individual neighborhoods, and is further subdivided by price points and such price-influencing factors as condition, cash flows – and even cap rates on rental properties.

To combat this problem Waite compiles and verifies data directly from records kept by local Multiple Listing Services. Using those sales records, Waite determines the supply inventory of major markets, giving him the hyper-local data that reveals a more complete picture of individual markets.

And according to Waite’s analysis’ the real estate rebound is already underway.

“The formula’s pretty simple,” he says. “As housing inventories shrink in real estate markets around the country, demand and prices go up.”

After examining the statistics for March, Waite sees a clear bottoming pattern, at least in some markets. If he’s right, the Western United States is already making a comeback and the ripples of resurgence will soon make their way to the Midwest and then to the East Coast.

What’s more, the improvement from year to year indicates the bottoming sequence will soon have prices on the rise.

Housing Markets in Western U.S. Have Already Bottomed

Remarkably, Waite’s research reveals the downtrodden Las Vegas housing market has already bottomed and is currently “balanced” between buyers and sellers. Housing markets in Seattle , Los Angeles , Phoenix and Denver are on the move too:

    * Phoenix ’s MLS housing inventory is 7.33 months, down from 19.1 months last year.
    * Denver ’s current inventory is 5.59 months, down 35% from a year ago.
    * San Diego ’s inventory stands at a paltry 4.19 months, down 58% from a year ago.
    * And Las Vegas ’ inventory stands at just 6.25 months, down a whopping 64% from an inventory of 17.5 months in 2008.

Waite sees the trend on the West Coast as a leading indicator that the worst is behind us.

In short, if you’re in one of those depressed markets where prices are still dropping, relief may well be on the way. As the supply of homes drops, demand picks up. And as that demand picks up, prices first stabilize and then begin to rise.

Based on this research the housing cycle on the West Coast has already bottomed and prices will start to swing upward in the fall. Eventually the trend will move from West to East and prices will move up broadly.

But the recovery will be painfully slow getting to certain markets where cities are still being hit with swelling inventories, which is likely to continue to put downward pressure on prices.

Housing supplies in Baltimore , for example, have increased 11% from March 2008, to 15.9 months this year. Similarly, listings grew from eight months to about 9.5 months in Houston , and from 8.5 months to 10 months in Charlotte .

But some of the hardest hit markets are clearly on the upswing. Miami has slashed inventories from a staggering 52 months to 31 months, a decrease of 40%. Rochester , New York and Boston have each dropped housing supplies by about 13% in the last 12 months.

Some realtors in Boston are even reporting that sellers are receiving multiple competing offers to buy homes for more than their asking price and buyers are entering counteroffers.

Fewer New Homes Stoke Demand

And it’s not just pre-existing home sales driving a rebound in the sector. In October 2007, new home permit applications stood at roughly 800,000 nationwide. A year later, in October of 2008, that number had dropped to about 480,000.

Since it takes about 12 months for buildout to progress from permit to finish — and with many builders halting construction altogether — Waite estimates only about 450,000 of those permits will actually translate into new homes that will hit the market in 2009. And with as new home inventories dry up, demand will start climbing.

In fact, declining new home inventories are already beginning to stabilize prices in hard-hit Southern California , an area where prices were hammered by a wave of foreclosures.”

KB Home (NYSE: KBH) Chief Executive Officer Jeffrey Mezger said on May 4 that home prices in Southern California have begun to stabilize, making his company’s new houses competitive with existing homes, including foreclosures.

“If you go to Southern Cal , as an example, we’re seeing a floor on pricing,” Mezger said in a conference call with analysts organized by J.P. Morgan Securities Inc. “We don’t see prices going down right now, which is a good thing, because then you can set a baseline.”

In March, Los Angeles-based KB Home, reported a narrower first-quarter loss as orders increased for the first time in three years.
And there are other positive signals.

The median price paid for a home in six Southern California counties was $250,000 in March, the same amount as in January and February, according to San Diego-based research company MDA DataQuick.

The National Association of Realtors says a total of 3.7 million homes were listed for sale nationwide at the end of March, down 10% from a year earlier.
The supply of homes for sale in 29 major metropolitan areas at the end of April was down 3.6% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville , Calif.

That last figure defies normal trends — listings typically increase in April as for-sale signs bloom heralding the spring home-shopping season. Since 1982, the average increase in April from the prior month has been 4.8%, according to Zelman & Associates, a research firm.

Tom Lawler, a housing economist based in Leesburg, Va., says the decline in listings “suggests that the bottom in home prices is much closer than many pundits believe.

Still Looming: Foreclosures, Credit Crisis, And Unemployment

However, Lawler also says the future remains uncertain because no one really knows how many homes in the foreclosure process will eventually land on the open market. Estimates are that some of the nation’s largest banks currently are listing only about 60% of foreclosed homes.

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) are the biggest owners of foreclosed homes, but they have only about 35% to 50% of those homes listed for sale at any given time, according to industry estimates.

And some foreclosed homes aren’t listed because they’re on the rental market, are undergoing repairs, or are subject to legal action or other delays.

Barclays Capital PLC (NYSE: BCS) estimates that banks and investors owned 765,500 foreclosed homes as of April 1, up from 629,100 a year earlier. Barclays forecasts that this inventory will peak at around 1.3 million homes in mid- to-late-2010, The Wall Street Journal reported.

The credit markets pose another obstacle to recovery.

There’s no doubt that banks have made it more difficult to borrow money. And mortgages are far more expensive than they appear, especially for people borrowing large amounts or trying to refinance.

As previously reported in Money Morning, buyers can only get those rock bottom 4.75% interest rates if they put 20% down, borrow $417,000 or less, and boast a high credit score (730 to 750).

And the days of “stated income” loans where you don’t have to document your earnings, and option adjustable-rate mortgages, where you could choose to pay less than the interest due, are long gone.

But while that’s true, it’s also true that mortgage lending is still one of the banks’ most important sources of revenue.

“Tight lending standards and the credit lockup is absolutely the limiting factor on how soon prices will recover nationwide,” Waite says. “But eventually, banks will loosen their purse strings if for no other reason than it’s their most efficient way to earn profits.”

But the cold reality is that skyrocketing unemployment remains a major threat to the recovery of the U.S. housing market. The unemployment rate soared to 8.9% in April, leaving more than 5 million workers without jobs. Economists predict the national jobless rate will probably hit 10% by year-end even if an economic recovery kicks off before then.

Consumers who are unemployed typically cannot afford to buy homes. Most can barely afford to pay for the homes they’re already living in. And even consumers who are afraid that they might be joining the jobless ranks are loath to take on the added risk – making them unlikely candidates to buy a new home either.

Bottom Line: Prices Don’t Matt er if You’re Not Selling

While the news may be full of talking heads espousing the latest “average” numbers about the downward spiral in home prices, the basic truth is the vast majority of homeowners won’t be selling this year or next.

The typical house is owned for five to seven years, and only about 5% of U.S. housing stock turns over in a single year, meaning only 1 in 20 homeowners plan to sell this year.

And, as Waite points out, houses aren’t a tradable commodity so there’s no reason why you should consider marking your home “to market” as the Wall Street bankers are being forced to do with the derivatives they’ve been trying to dump.

In fact, if you’re not in a hurry to sell, there’s a good chance that your home will recover much of its pricing power over the next few years.

“Unless you have to sell now, you’re pretty much insulated. If you sell in five years, chances are what’s happening now won’t have any effect on your selling price at all,” Waite said.

This article has been reposted from Money Morning. You can view the article on Money Morning’s investment news website here.

Is that darn pesky House bill 1787 a Black Cloud for Investors?

admin — Sun, 14 Jun 2009 04:22:37 +0000

The truth about House Bill 1787.

Give me your thoughts.

This just in from Bill Bronchick, Real Estate Investor and Attorney.

From: Bill Bronchick
Date: 11 June 2009 18:33:35 BST
Subject: The truth on House Bill 1787
From: Bill Bronchick

Re: The truth on House Bill 1787

I’ve received a number of emails from people claiming that House
Bill 1787 will eliminate owner financed deals to once every 36 months.

This is patently FALSE.

Become an informed citizen and read it yourself:

http://www.govtrack .us/congress/ bill.xpd? bill=h111- 1728

This bill aims to include owner financed deals within the definition
of “Truth in Lending” law. I’ve always instructed in my courses and
seminars that you should comply with Truth in Lending, which
requires just a few simple disclosures.

The bill also would, in theory, make a person who sells a home a
“mortgage originator”. This would require compliance with RESPA,
which I’ve always instructed in my courses and seminars that you
should comply with anyway.

Finally, the bill would require that you actually qualify your
buyer. It prohibits, “lending without due regard of the mortgagor’s
ability to repay”. Duh! Only a fool would put someone in an owner
financed house deal without checking their income, debt and credit.

All in all, there’s nothing to worry about here for investors, it’s
just a matter of compliance with some federal rules and a couple of
disclosures.

Any comments or questions are welcome.

Your partner in success,

Bill Bronchick, Esq.

so hit us up with some comments and let us know what you think.

Oh, our next Real Estate Free Seminar starts again second Wednesday

of the month

http://www.RealEstateGranite.com/meeting.html

Yous in Success !

Should you take the REO Bus Tour?

admin — Fri, 13 Feb 2009 01:13:32 +0000

Now is the time to buy area investment properties!

Why? Buy low and sell high is how you succeed in real estate.

Don’t follow the pack that is running away from real estate.

The adjustment to area home prices and the continued cooperation of low interest rates makes 2009 the perfect time to buy an investment property. Now you can use a conventional loan, private money or hard money loans to acquire these properties and have your tenant pay your mortgage off and put extra money in your pocket every month.

Right now the best deals you can get are BANK OWNED Properties (REO’s).

Join us as we tour area investments that we are hand picking for you. We will teach you about the REO process during our tour…everything from how the bank reclaims the property, steps the bank takes to get it sold, repairs, finding a property manager and so much more!

Senate OKs $15,000 tax break for homebuyers

admin — Wed, 04 Feb 2009 06:00:59 +0000

By DAVID ESPO, AP Special Correspondent David Espo, Ap Special Correspondent 52 mins ago

WASHINGTON – The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry, a victory for Republicans eager to leave their mark on a mammoth economic stimulus bill at the heart of President Barack Obama‘s recovery plan.

The tax break was adopted without dissent, and came on a day in which Obama pushed back pointedly against Republican critics of the legislation even as he reached across party lines to consider scaling back spending.

“Let’s not make the perfect the enemy of the essential,” Obama said as Senate Republicans stepped up their criticism of the bill’s spending and pressed for additional tax cuts and relief for homeowners. He warned that failure to act quickly “will turn crisis into a catastrophe and guarantee a longer recession.”

Democratic leaders have pledged to have legislation ready for Obama’s signature by the end of next week, and they concede privately they will have to accept some spending reductions along the way.

Sen. Johnny Isakson, R-Ga., who advanced the homebuyers tax break, said it was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall.

The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break for the purchase of new homes only.

Isakson’s office said the proposal would cost the government an estimated $19 billion.

Democrats readily agreed to the proposal, although it may be changed or even deleted as the stimulus measure makes its way through Congress over the next 10 days or so.

“This bill needs to be cut down,” Republican Mitch McConnell of Kentucky said on the Senate floor. He cited $524 million for a State Department program that he said envisions creating 388 jobs. “That comes to $1.35 million per job,” he added.

Republicans readied numerous attempts to reduce the cost of the $900 billion measure, which includes tax cuts and new spending designed to ignite recovery from the worst economic crisis since the Great Depression.

But after days of absorbing rhetorical attacks, Obama and Senate Democrats mounted a counteroffensive against Republicans who say tax cuts alone can cure the economy.

Obama said the criticisms he has heard “echo the very same failed economic theories that led us into this crisis in the first place, the notion that tax cuts alone will solve all our problems.”

“I reject those theories and so did the American people when they went to the polls in November and voted resoundingly for change,” said the president, who was elected with an Electoral College landslide last fall and enjoys high public approval ratings at the outset of his term.

Obama did not mention any Republicans by name, and most have signaled their support for varying amounts of new spending.

Even so, the president repeated his retort word for word in late afternoon, yet softened the partisan impact of his comments by meeting at the White House with senators often willing to cross party lines.

His first visitor was Sen. Olympia Snowe, R-Maine, a moderate GOP lawmaker. Later he met with Sens. Susan Collins, R-Maine, and Ben Nelson, D-Neb.

“I gave him a list of provisions” for possible deletion from the bill, Collins told reporters outside the White House. Among them were $8 billion to upgrade facilities and information technology at the State Department and funds for combatting a possible outbreak of pandemic flu and promoting cyber-security. The latter two items, she said, are “near and dear to her,” but belong in routine legislation and not an economic stimulus measure.

Collins and Nelson have been working on a list of possible spending cuts totaling roughly $50 billion, although they have yet to make details public.

The House approved its own version of the stimulus bill last week on a party line vote, but the political environment in the Senate is far different.

Democrats hold a comfortable 58-41 majority. But because the legislation would increase the federal deficit, any lawmaker can insist that 60 votes be required to add to its cost.

While the 60-vote threshold can impose a check on Democrats, it can also illuminate the cross-pressures at work on Republicans.

A Democratic attempt on Tuesday to add $25 billion for public works projects failed when it gained only 58 votes, two short of the total needed. But a few hours later, a proposed $11 billion tax break for new car buyers attracted 72 votes, including several from Republicans.

___

Associated Press writers Jennifer Loven and Andrew Taylor contributed to this story.

(This version CORRECTS the estimated cost of the homebuyer tax break to $19 billion, not $19 million.)

Copyright © 2009 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.