Single Family Homes
- 55% of homes were 3 bedrooms - avg price $249,614
- 42% closed in 30 days or less
- 20% closed in 121 days or more
- 44% buyers used conventional financing
- 34% used FHA financing
- closings down from last month (1781 vs 1605)
Monday, December 21, 2009
PDX November Metro Sales Stats
Friday, November 27, 2009
Washington County October Sold Stats
Single Family Residential
- 55% of homes were 3 bedrooms - avg price = $253,496
- 42% closed in 30 days or less
- 21% closed in 121 days or more
- 48% of buyers used conventional financing
- 34% of buyers used FHA financing
- Closings were down 1% from last month (520 vs 517)
Tuesday, November 24, 2009
Inflation is Investor's Best Friend
Actually, if you are investing in stocks and bonds, mutual funds, or just about anything else (except, perhaps, commodities), inflation can be a real killer. The title of this article was adapted from a recent article in Forbes entitled 'U.S. Dollar Has A Long Way To Fall', which posed the question: why does the Fed want inflation? It is very simple: If you carry a lot of debt, inflation is your friend. If the Fed wants inflation (the not-implausible premise of that article), you can be assured that the Fed will make inflation, sooner or later. Next question: who carries a lot of debt? You guessed it, real estate investors. Through the magic of high leverage ratios and cheap fixed rate financing (particularly on one to four unit residential income property), real estate investors have the ability to take potentially ruinous inflation and turn it to their advantage. Of course, if you borrow a lot of money (as the U.S. treasury has from many foreign governments), inflation means the dollars you have to pay back will be worth very little. Imagine what the rents on your income properties will be like in twenty or thirty years into the future .... even the worst performing investment in current dollars will be looking pretty sweet by then, provided you have obtained fixed rate financing. Thus the old expression: 'do not wait to buy real estate, buy real estate and wait.'
When is the best time to buy insurance? Why, before you need it, of course. Currently, there is very little inflation in the U.S., and some sectors have seen deflationary pressures, such as, for instance rents in most markets. Does this mean that you do not need to think about inflation? In a word, no. This is the time to take the steps you absolutely must take if you want to have any purchasing power in the post-financial crisis future.
As the price of gold bears witness, many people around the world are losing faith in the once-almightly U.S. dollar. If those people had actually seen the charts showing the expansion in the money supply that began during the depths of the financial crisis, they might have even less faith. For, the U.S. has set upon a course of monetary expansionism that is, I believe, unprecedented in its scale in historical times. Even billionaire investor Warren Buffet believes inflation is on its way: Bloomberg reports that Buffet said: 'a country that continuously expands its debt as a percentage of GDP and raises much of the money abroad to finance that, it is going to inflate its way out of the burden of that debt.'
Here is where the smaller residential income property makes sense. Only on these properties can you lock in fixed rate thirty year financing. While you can get a fixed rate on commercial properties (five units and up), you will only have a rate lock for a much more limited time. By the time your rate lock expires and it is time to refinance, the rates will likely have increased dramatically. Not so with the conventional thirty year fixed rate loan. The people who lock in as much as this high-quality debt as possible to purchase income producing properties will look like geniuses a few years down the road, once the effect of the monetary expansion has finally been felt in earnest. Indeed, this may even be something of a self-fulfilling prophecy in that the more people flee the dollar, the more they will invest in commodities such as oil, which will in turn, stoke higher inflation. Get it?
I do feel sorry for people who have entrusted their life savings to the tender mercies of the financial services industry and the pathetic 401K. The meager percentage of after-inflation return you can expect to get on such accounts (after expenses) in the future will never be enough to provide for most peoples retirement needs. Why not opt out and place your trust in what you already know is a good investment: an income property in a good location with a long term fixed rate loan. That is something you, not Wall Street, can control, manage, and profit from for years to come.
When is the best time to buy insurance? Why, before you need it, of course. Currently, there is very little inflation in the U.S., and some sectors have seen deflationary pressures, such as, for instance rents in most markets. Does this mean that you do not need to think about inflation? In a word, no. This is the time to take the steps you absolutely must take if you want to have any purchasing power in the post-financial crisis future.
As the price of gold bears witness, many people around the world are losing faith in the once-almightly U.S. dollar. If those people had actually seen the charts showing the expansion in the money supply that began during the depths of the financial crisis, they might have even less faith. For, the U.S. has set upon a course of monetary expansionism that is, I believe, unprecedented in its scale in historical times. Even billionaire investor Warren Buffet believes inflation is on its way: Bloomberg reports that Buffet said: 'a country that continuously expands its debt as a percentage of GDP and raises much of the money abroad to finance that, it is going to inflate its way out of the burden of that debt.'
Here is where the smaller residential income property makes sense. Only on these properties can you lock in fixed rate thirty year financing. While you can get a fixed rate on commercial properties (five units and up), you will only have a rate lock for a much more limited time. By the time your rate lock expires and it is time to refinance, the rates will likely have increased dramatically. Not so with the conventional thirty year fixed rate loan. The people who lock in as much as this high-quality debt as possible to purchase income producing properties will look like geniuses a few years down the road, once the effect of the monetary expansion has finally been felt in earnest. Indeed, this may even be something of a self-fulfilling prophecy in that the more people flee the dollar, the more they will invest in commodities such as oil, which will in turn, stoke higher inflation. Get it?
I do feel sorry for people who have entrusted their life savings to the tender mercies of the financial services industry and the pathetic 401K. The meager percentage of after-inflation return you can expect to get on such accounts (after expenses) in the future will never be enough to provide for most peoples retirement needs. Why not opt out and place your trust in what you already know is a good investment: an income property in a good location with a long term fixed rate loan. That is something you, not Wall Street, can control, manage, and profit from for years to come.
Tuesday, November 10, 2009
Real Estate Investors
One of the biggest reasons small businesses fail is because the owners cannot separate themselves from the daily processes to focus on improving, growing and making their business a success. They are stuck working 12 hours a day handling the daily processes and burn out. Real estate is similar in many ways. Here are 5 reasons most real estate investors fail.
1) Lack of focus & business plan – Many investors try every strategy possible with 10% the focus they need to have success with one strategy. Pick one strategy, document it in a business plan and master it before moving on to a 2nd strategy.
2) Poor or lack of a mentor and support group – It is always good to get advice from a mentor and other experts. They will point out unnecessary risks, provide solutions and even save deals or save you from a failure.
3) Wrong strategy – Many investors are followers and do what everyone else is doing or they choose a strategy that just does not work in their market. Some of the most successful investors do exactly what everyone else is not doing. Do your homework and choose the right strategy.
4) Lack of effort and time – This one is obvious. Many new real estate investors get excited and work hard for 2 days then do nothing for 2 months. You have to write down goals and what it will take to achieve them, put together daily tasks and complete them on a consistent basis.
5) Lack of knowledge – I have seen my share of messy deals – from do-it-yourselfers who do everything poorly, to inexperienced investors in way over their head. You should master your strategy and have the knowledge, systems and team in place to be successful in real estate investing. And always be thorough in your due diligence.
1) Lack of focus & business plan – Many investors try every strategy possible with 10% the focus they need to have success with one strategy. Pick one strategy, document it in a business plan and master it before moving on to a 2nd strategy.
2) Poor or lack of a mentor and support group – It is always good to get advice from a mentor and other experts. They will point out unnecessary risks, provide solutions and even save deals or save you from a failure.
3) Wrong strategy – Many investors are followers and do what everyone else is doing or they choose a strategy that just does not work in their market. Some of the most successful investors do exactly what everyone else is not doing. Do your homework and choose the right strategy.
4) Lack of effort and time – This one is obvious. Many new real estate investors get excited and work hard for 2 days then do nothing for 2 months. You have to write down goals and what it will take to achieve them, put together daily tasks and complete them on a consistent basis.
5) Lack of knowledge – I have seen my share of messy deals – from do-it-yourselfers who do everything poorly, to inexperienced investors in way over their head. You should master your strategy and have the knowledge, systems and team in place to be successful in real estate investing. And always be thorough in your due diligence.
Monday, November 02, 2009
Pending Sales Highest in 3 Years
WASHINGTON (Reuters) - Pending sales of previously owned U.S. homes unexpectedly rose in September to their highest level in nearly three years ahead of the expiration of a popular tax credit for first-time buyers, a survey showed on Monday. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in September, rose 6.1 percent to 110.1 -- the highest level since December 2006. It was the eighth straight monthly rise in the index, the longest streak since the measurement started in 2001. Analysts polled by Reuters had forecast pending home sales, which lead existing home sales by one to two months, to be flat in September after rising to 103.8 in August. "What we're witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month," said NAR chief economist Lawrence Yun. "Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery." The Pending Homes Sales Index surged a record 21.2 percent in September from the same period a year-ago.
Wednesday, October 07, 2009
First Time Home Owner Tax Credit Likely To Stay; But Current Homeowners Still Face Uncertain Future
As the, so far, jobless recovery continues, the White House is reportedly hunkered down trying to figure out what to do next. Obama administration officials are taking note of programs that have worked and those that have not done as well.
Among the programs that apparently fall into the “success” column is the $8,000 tax credit for first time home buyers.
The tax credit for first timers was part of the $787 billion dollar stimulus program and is being credited with helping the real estate industry stage a modest comeback—at least among first time home buyers.
All indications are that the tax credits will be continued well into 2010 and maybe beyond. Some legislators have even suggested that the credit amount be increased to help sales in places such as coastal California, where home prices tend to be much higher than in many other parts of the nation.
While helping first time buyers is great, we are still struggling with what to do with current home owners who cannot afford their mortgages and face foreclosure…still a growing problem.
With the unemployment rate expected to only get higher in the months ahead, and with thousands upon thousands of mortgages on the verge of resetting soon at much higher rates, no real recovery in the real estate market is likely until the foreclosure problem is dealt with more effectively than it has been. And, so far, it hasn’t been dealt with effectively at all.
The president still is resisting going to bat for a change in bankruptcy law that would allow judges to adjust mortgages–something he strongly advocated as a candidate.
And, despite some self congratulating newspaper ads, most major banks have been loath to adjust homeowners’ mortgages by any method other than reducing interest while leaving principal alone. Not a good way to go about this, many economists argue.
Helping lots of first timers buy a home while allowing countless current homeowners to be booted from their properties makes little sense…politically or economically.
Among the programs that apparently fall into the “success” column is the $8,000 tax credit for first time home buyers.
The tax credit for first timers was part of the $787 billion dollar stimulus program and is being credited with helping the real estate industry stage a modest comeback—at least among first time home buyers.
All indications are that the tax credits will be continued well into 2010 and maybe beyond. Some legislators have even suggested that the credit amount be increased to help sales in places such as coastal California, where home prices tend to be much higher than in many other parts of the nation.
While helping first time buyers is great, we are still struggling with what to do with current home owners who cannot afford their mortgages and face foreclosure…still a growing problem.
With the unemployment rate expected to only get higher in the months ahead, and with thousands upon thousands of mortgages on the verge of resetting soon at much higher rates, no real recovery in the real estate market is likely until the foreclosure problem is dealt with more effectively than it has been. And, so far, it hasn’t been dealt with effectively at all.
The president still is resisting going to bat for a change in bankruptcy law that would allow judges to adjust mortgages–something he strongly advocated as a candidate.
And, despite some self congratulating newspaper ads, most major banks have been loath to adjust homeowners’ mortgages by any method other than reducing interest while leaving principal alone. Not a good way to go about this, many economists argue.
Helping lots of first timers buy a home while allowing countless current homeowners to be booted from their properties makes little sense…politically or economically.
Thursday, September 24, 2009
4 steps congress can take to improve the real estate market
Several nationally known experts in real estate and the economy shared their perspectives during a recent forum and charity event for the Orange County affiliate of Susan G. Komen for the Cure.
Among them, real estate analyst and investor Bruce Norris of The Norris Group in Riverside, CA, recommended that Congress do several things to boost the real estate market. These include:
1) Increase the number of loans made available to well capitalized investors: Expand Fannie and Freddie loan programs from a maximum of 10 loans per investor to an unlimited number of loans for qualified investors.
2) Make the 203K FHA loan program available to investors: A 203K loan allows a property needing work to be purchased "as is," but included in the loan amount is money for repairs. The loan funds both the purchase and rehab of the property. Investors need this loan now, but this loan is currently only available to owner occupants. FHA previously made this loan available to investors, but stopped the practice in 1996 when HUD ran out of lender owned, fix uppers. Banks could solve the vacant house problem by giving investors back the 203K loan program.
3) Eliminate the 90-day waiting period before a repaired property can be sold to a buyer using an FHA loan: Investors who purchase fixer uppers can often completely repair the property in a matter of weeks. But the current law prohibits investors from reselling the property within 90 days. The assumption is that fraud must be taking place if a property is resold within 90 days. It's ridiculous to assume that every investor who purchases a property, improves and resells it is committing fraud. All this policy does is increase investors' costs of purchasing and rehabbing vacant homes.
4) Allow loans to be taken over by credit-qualified new buyers with no down payment. Through this process, which was successfully used in the 1980s, new buyers simply step in and take over the loan payments. The only stipulation is that the loan has to be made current at the close of escrow. The U.S. currently has about one million owners who will not be capable of keeping their homes without a huge discount on the principle balance. Many of these properties have fixed rates at very favorable rates. Allowing willing and capable buyers to come in and take over these loans would help contain the spread of foreclosures across the country.
Among them, real estate analyst and investor Bruce Norris of The Norris Group in Riverside, CA, recommended that Congress do several things to boost the real estate market. These include:
1) Increase the number of loans made available to well capitalized investors: Expand Fannie and Freddie loan programs from a maximum of 10 loans per investor to an unlimited number of loans for qualified investors.
2) Make the 203K FHA loan program available to investors: A 203K loan allows a property needing work to be purchased "as is," but included in the loan amount is money for repairs. The loan funds both the purchase and rehab of the property. Investors need this loan now, but this loan is currently only available to owner occupants. FHA previously made this loan available to investors, but stopped the practice in 1996 when HUD ran out of lender owned, fix uppers. Banks could solve the vacant house problem by giving investors back the 203K loan program.
3) Eliminate the 90-day waiting period before a repaired property can be sold to a buyer using an FHA loan: Investors who purchase fixer uppers can often completely repair the property in a matter of weeks. But the current law prohibits investors from reselling the property within 90 days. The assumption is that fraud must be taking place if a property is resold within 90 days. It's ridiculous to assume that every investor who purchases a property, improves and resells it is committing fraud. All this policy does is increase investors' costs of purchasing and rehabbing vacant homes.
4) Allow loans to be taken over by credit-qualified new buyers with no down payment. Through this process, which was successfully used in the 1980s, new buyers simply step in and take over the loan payments. The only stipulation is that the loan has to be made current at the close of escrow. The U.S. currently has about one million owners who will not be capable of keeping their homes without a huge discount on the principle balance. Many of these properties have fixed rates at very favorable rates. Allowing willing and capable buyers to come in and take over these loans would help contain the spread of foreclosures across the country.
Thursday, September 17, 2009
August 09' PDX Metro Stats
Single Family Residences
- 54% of homes were 3 bedrooms - avg price $259,805
- 40% closed in 30 days or less
- 21% closed in 121 days or more
- 47% of buyers used conventional financing
- 31% of buyers used FHA financing
- closings were down 7% from last month (1656 vs 1782)
Tuesday, September 15, 2009
Economic Updates
Economic Updates
Posted: Monday, September 14 at 09:11PM
Last Week in the News
--------------------------------------------------------------------------------
According to the Federal Reserve, consumer credit debt fell in July by $21.6 billion, an annual rate of 10.5%. It was the biggest decline since recordkeeping began in 1943. Economists had forecast consumer debt would drop $4 billion.
Total consumer credit debt in July was $2.47 trillion. Meanwhile, the figures for June were upwardly revised. Consumers reduced their borrowing in June by $15.5 billion.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending September 4 rose 17% to 648.3 from 554.1 in the prior week. Purchase volume rose 9.5% to 304.1. Refinancing applications increased 22.5% to 2,651.2.
The Commerce Department reported gains in both trade imports and exports, which indicates that the worst recession since the 1930s may be ending. Imports in July rose 4.7% to $159.6 billion. It was the largest monthly advance since recordkeeping began in 1992 and the second monthly increase after 10 monthly declines. Exports rose 2.2% to $127.6 billion, the third straight monthly increase.
Initial claims for unemployment benefits fell by 26,000 to 550,000 in the week ending September 5. The figure was lower than the 560,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending August 29 fell by 159,000 to 6.09 million.
The Reuters/University of Michigan consumer sentiment index for September increased to 70.2 from 65.7 in August. Economists had forecast a reading of 67.5.
The Commerce Department said wholesalers reduced their inventories by 1.4% in July, following a revised 2.1% drop in June. It was the 11th straight monthly decline. Meanwhile, sales at the wholesale level rose 0.5% in July, the third consecutive monthly gain.
Upcoming on the economic calendar are reports on retail sales on September 15, the housing market index on September 16 and housing starts on September 17.
Posted: Monday, September 14 at 09:11PM
Last Week in the News
--------------------------------------------------------------------------------
According to the Federal Reserve, consumer credit debt fell in July by $21.6 billion, an annual rate of 10.5%. It was the biggest decline since recordkeeping began in 1943. Economists had forecast consumer debt would drop $4 billion.
Total consumer credit debt in July was $2.47 trillion. Meanwhile, the figures for June were upwardly revised. Consumers reduced their borrowing in June by $15.5 billion.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending September 4 rose 17% to 648.3 from 554.1 in the prior week. Purchase volume rose 9.5% to 304.1. Refinancing applications increased 22.5% to 2,651.2.
The Commerce Department reported gains in both trade imports and exports, which indicates that the worst recession since the 1930s may be ending. Imports in July rose 4.7% to $159.6 billion. It was the largest monthly advance since recordkeeping began in 1992 and the second monthly increase after 10 monthly declines. Exports rose 2.2% to $127.6 billion, the third straight monthly increase.
Initial claims for unemployment benefits fell by 26,000 to 550,000 in the week ending September 5. The figure was lower than the 560,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending August 29 fell by 159,000 to 6.09 million.
The Reuters/University of Michigan consumer sentiment index for September increased to 70.2 from 65.7 in August. Economists had forecast a reading of 67.5.
The Commerce Department said wholesalers reduced their inventories by 1.4% in July, following a revised 2.1% drop in June. It was the 11th straight monthly decline. Meanwhile, sales at the wholesale level rose 0.5% in July, the third consecutive monthly gain.
Upcoming on the economic calendar are reports on retail sales on September 15, the housing market index on September 16 and housing starts on September 17.
Thursday, September 10, 2009
The Blood Bath is About Over
THE BLOOD BATH IS ABOUT OVER
Posted: Thursday, September 10 at 09:00PM
I wanted to take a moment to highlight an important market indicator that has shown significant promise in the past few weeks. The national home supply has fallen down to its lowest levels since December 2008. In June, there was 9.4 months of supply on the market, down from a year-ago level of 11.0 months.
It’s one more sign that the housing market may be mending itself. Housing supply is an important metric because home values across every U.S. market are rooted in supply and demand. When the supply of available homes outpaces buyer demand, home values tend to fall. And, by contrast, when homes are relatively scarce, values tend to rise.
We’re still a long way from historical averages, but dwindling home inventory may be one reason why the national median sale price rose by $7,000 last month.
It is important to remember that home sales of late have been spurred several key factors including low mortgage rates and the First-Time Home Buyer Tax Credit. A NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are very good opportunities. “Despite some of the challenges, the housing market continues to demonstrate signs of recovery,” said McMillan. “The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it’s taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the December 1 expiration date.”
The S&P/Case-Shiller index for home prices in 20 major cities in the three months ended June 30 was up 1.4% from its level in the three months ended May 31. It was the first time the index rose two months in a row since mid-2006. Prices gained in 18 of 20 markets, but were still down 31% from their July 2006 peak.
These numbers mark a definitive slowing in the downward spiral since 2006. "Momentum matters," said Robert Shiller, the Yale University economist who helped create the index. "This is a sudden break in momentum."
We are now hearing almost daily reports of “good news” in the real estate sector. This good news compounds upon itself and begins to move the market in a more definite direction of growth. One component of the Case-Shiller index, consumer expectations of where the economy will be in six months, rose to 75.8, its highest since the recession began in December 2007. Consumers' assessment of present conditions also improved, along with stepped-up plans for buying homes, autos and several major appliances.
At a macro level economists and real-estate professionals warn that a recovery in housing is likely to be bumpy: Home prices could drop again as job losses drive foreclosures higher. However, there are various markets that have suffered so greatly, that they will begin to surge in the coming months regardless of a few bumps on the national scene. We are working diligently to identify these markets, so that your clients will enjoy a maximum benefit of the economic recovery.
Taken from MasonHill.com/blog
Posted: Thursday, September 10 at 09:00PM
I wanted to take a moment to highlight an important market indicator that has shown significant promise in the past few weeks. The national home supply has fallen down to its lowest levels since December 2008. In June, there was 9.4 months of supply on the market, down from a year-ago level of 11.0 months.
It’s one more sign that the housing market may be mending itself. Housing supply is an important metric because home values across every U.S. market are rooted in supply and demand. When the supply of available homes outpaces buyer demand, home values tend to fall. And, by contrast, when homes are relatively scarce, values tend to rise.
We’re still a long way from historical averages, but dwindling home inventory may be one reason why the national median sale price rose by $7,000 last month.
It is important to remember that home sales of late have been spurred several key factors including low mortgage rates and the First-Time Home Buyer Tax Credit. A NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are very good opportunities. “Despite some of the challenges, the housing market continues to demonstrate signs of recovery,” said McMillan. “The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it’s taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the December 1 expiration date.”
The S&P/Case-Shiller index for home prices in 20 major cities in the three months ended June 30 was up 1.4% from its level in the three months ended May 31. It was the first time the index rose two months in a row since mid-2006. Prices gained in 18 of 20 markets, but were still down 31% from their July 2006 peak.
These numbers mark a definitive slowing in the downward spiral since 2006. "Momentum matters," said Robert Shiller, the Yale University economist who helped create the index. "This is a sudden break in momentum."
We are now hearing almost daily reports of “good news” in the real estate sector. This good news compounds upon itself and begins to move the market in a more definite direction of growth. One component of the Case-Shiller index, consumer expectations of where the economy will be in six months, rose to 75.8, its highest since the recession began in December 2007. Consumers' assessment of present conditions also improved, along with stepped-up plans for buying homes, autos and several major appliances.
At a macro level economists and real-estate professionals warn that a recovery in housing is likely to be bumpy: Home prices could drop again as job losses drive foreclosures higher. However, there are various markets that have suffered so greatly, that they will begin to surge in the coming months regardless of a few bumps on the national scene. We are working diligently to identify these markets, so that your clients will enjoy a maximum benefit of the economic recovery.
Taken from MasonHill.com/blog
Top 5 mistakes beginner (and experienced) investors make
1. Buying books and attending seminars, but never using what you learn: This is the most common mistake investors make. They spend thousands on programs, and then let them collect dust on the shelf. I’ve run into a few people at multiple seminars who have never bought a single house! Don’t fall into this trap. Read the books and take action.
2. Starting in the business without really understanding it: This is a very dangerous mistake to make. I get calls every week from people who went into a deal not understanding how the business works and they are now tied up in something they should have avoided. I get people calling me asking how to structure a deal where they can sell a house back to the original owner after foreclosure, I get calls from people who are keeping rental properties in their own name, I get calls from people who sign contracts to buy houses not knowing that there are liens on the property or knowing all of the costs that go into buying and maintaining the house…
If you aren’t careful, you could end up losing a ton of money, damaging your credit, hurting you name in the community, and even go into bankruptcy. You absolutely need to understand the fundamentals before you jump head first into investing in real estate. That’s why it’s so important that you keep reading and stay involved with investor communities. Smart people learn from their mistakes; wise people learn from other people’s mistakes.
3. Buying the first property they see: This is a lot like mistake number 2. People get excited about the first person who calls and are determined to make it work – regardless of whether or not it’s a good deal. For more experienced investors this becomes a desire to force every deal to work – especially in slow times. That’s going to result in an ulcer. Not every deal is a good deal, and you’re not going to be able to help everyone. You will save yourself a lot of time, money, and heartache if you set up clear investing criteria that establish what your requirements are to take on a deal.
4. Always looking for a better deal: Having investment criteria is great, but they can’t be impossibly high. This is what I like to call the paralysis of analysis. Some investors get caught up always searching for a better deal and pass up countless viable deals. If times are getting lean, tighten up your criteria a bit to fit the market and keep on moving.
5. Failing to set proper financial goals: This has two steps. The first is that if you don’t have a set, measureable, attainable goal, you will have a hard time succeeding. You need something specific to strive for. Too often in this business you hear “I want to be financially secure.” That is a noble ambition, but it’s a terrible goal. “I want to have bought and sold 10 houses and made $200,000 in the next 12 months” is a good goal. Goals should be stretchingly realistic. Too easy and you won’t work hard enough, too hard and you’ll give up. You need something that keeps you working hard, but that you can achieve if you try your best.
The second side to this is that not enough investors realize that they are running a business. You have to know exactly how much you need to make every month to keep your doors open. That is your minimum requirement. You need to keep track of your revenues, expenses, and all of the measureable data that you can like you average marketing cost to buy a house, average holding costs, average costs to sell, and average hold time. Once you’ve got those numbers, you can set mini-goals. For example: “I want to cut my marketing costs by 50% over the next 6 months.” Or “I want to cut my average hold time by 3 weeks over the next 3 months.” Once you’ve got your business up and running, these small, measurable, and attainable goals are what are going to take you to the next level.
Whether you’re a new investor or an experienced veteran, it’s sometimes easy to fall into these traps, so make sure you don’t!
2. Starting in the business without really understanding it: This is a very dangerous mistake to make. I get calls every week from people who went into a deal not understanding how the business works and they are now tied up in something they should have avoided. I get people calling me asking how to structure a deal where they can sell a house back to the original owner after foreclosure, I get calls from people who are keeping rental properties in their own name, I get calls from people who sign contracts to buy houses not knowing that there are liens on the property or knowing all of the costs that go into buying and maintaining the house…
If you aren’t careful, you could end up losing a ton of money, damaging your credit, hurting you name in the community, and even go into bankruptcy. You absolutely need to understand the fundamentals before you jump head first into investing in real estate. That’s why it’s so important that you keep reading and stay involved with investor communities. Smart people learn from their mistakes; wise people learn from other people’s mistakes.
3. Buying the first property they see: This is a lot like mistake number 2. People get excited about the first person who calls and are determined to make it work – regardless of whether or not it’s a good deal. For more experienced investors this becomes a desire to force every deal to work – especially in slow times. That’s going to result in an ulcer. Not every deal is a good deal, and you’re not going to be able to help everyone. You will save yourself a lot of time, money, and heartache if you set up clear investing criteria that establish what your requirements are to take on a deal.
4. Always looking for a better deal: Having investment criteria is great, but they can’t be impossibly high. This is what I like to call the paralysis of analysis. Some investors get caught up always searching for a better deal and pass up countless viable deals. If times are getting lean, tighten up your criteria a bit to fit the market and keep on moving.
5. Failing to set proper financial goals: This has two steps. The first is that if you don’t have a set, measureable, attainable goal, you will have a hard time succeeding. You need something specific to strive for. Too often in this business you hear “I want to be financially secure.” That is a noble ambition, but it’s a terrible goal. “I want to have bought and sold 10 houses and made $200,000 in the next 12 months” is a good goal. Goals should be stretchingly realistic. Too easy and you won’t work hard enough, too hard and you’ll give up. You need something that keeps you working hard, but that you can achieve if you try your best.
The second side to this is that not enough investors realize that they are running a business. You have to know exactly how much you need to make every month to keep your doors open. That is your minimum requirement. You need to keep track of your revenues, expenses, and all of the measureable data that you can like you average marketing cost to buy a house, average holding costs, average costs to sell, and average hold time. Once you’ve got those numbers, you can set mini-goals. For example: “I want to cut my marketing costs by 50% over the next 6 months.” Or “I want to cut my average hold time by 3 weeks over the next 3 months.” Once you’ve got your business up and running, these small, measurable, and attainable goals are what are going to take you to the next level.
Whether you’re a new investor or an experienced veteran, it’s sometimes easy to fall into these traps, so make sure you don’t!
Monday, September 07, 2009
Your Tenant Behind on Their Rent?
Tenant debt is rising which makes sense in today's economic environment. With the exception of the most expensive areas (such as California, New York City, and the northeast), the average amount of tenant debt is normally between $2500 and $3000.
Why are accounts over $4,000 so high? The answer: landlords allowed tenants to go month after month paying little or no rent, before they were eventually evicted or the tenant skipped out. This is obviously a sign of the times.
I assume landlords are allowing tenants to live in their units for three to four months without paying rent for one of two reasons:
1. Compassion – Times are tough and some landlords are trying to help their tenants through a rough period. I admire anyone who would help someone out.
2. Low Occupancy – The rational is that if a landlord has empty units he cannot rent, then a promise to pay from a current tenant is better than an another empty unit.
Of course, how you handle a tenant who is delinquent on rent is up to you. Data shows once a tenant becomes two months behind, the likelihood that he will get current and stay current on rent is very slim. If I had a dollar for every story I have heard from landlords about them bending over backwards for a tenant only to get burned in the end, I could take a very nice vacation.
From a collection standpoint, the higher the balance, the tougher the debt is to collect. Not only is it tougher to collect, the landlord is out a lot of money, and is now emotional about the debt. By the time the landlord gives the collection account to an agency, he or she is upset and wants the account collected immediately. Now the agency has a client whose expectations are way too high. Logically, if the tenant would not, or could not, pay when he actually lived in the rental unit, how likely is it that he will immediately pay a collection agency?
I am not suggesting that the debt will never be collected. However, if it is collected, it will most likely take some time. The circumstances that got the tenant into a difficult financial situation must change, and he must be motivated to improve his credit rating before he will pay. Again, reporting tenant debt to Experian, Equifax, and TransUnion is very important if the debt is ever to be collected.
It is a mistake for a landlord to assume the debt they are owed by a previous tenant will never be paid. You have three options: go to court, turn the account over to a collection agency as a non-judgment, or simply report the debt to all three major credit bureaus yourself. Any of these three options could result in recouping some of the money you have lost.
Why are accounts over $4,000 so high? The answer: landlords allowed tenants to go month after month paying little or no rent, before they were eventually evicted or the tenant skipped out. This is obviously a sign of the times.
I assume landlords are allowing tenants to live in their units for three to four months without paying rent for one of two reasons:
1. Compassion – Times are tough and some landlords are trying to help their tenants through a rough period. I admire anyone who would help someone out.
2. Low Occupancy – The rational is that if a landlord has empty units he cannot rent, then a promise to pay from a current tenant is better than an another empty unit.
Of course, how you handle a tenant who is delinquent on rent is up to you. Data shows once a tenant becomes two months behind, the likelihood that he will get current and stay current on rent is very slim. If I had a dollar for every story I have heard from landlords about them bending over backwards for a tenant only to get burned in the end, I could take a very nice vacation.
From a collection standpoint, the higher the balance, the tougher the debt is to collect. Not only is it tougher to collect, the landlord is out a lot of money, and is now emotional about the debt. By the time the landlord gives the collection account to an agency, he or she is upset and wants the account collected immediately. Now the agency has a client whose expectations are way too high. Logically, if the tenant would not, or could not, pay when he actually lived in the rental unit, how likely is it that he will immediately pay a collection agency?
I am not suggesting that the debt will never be collected. However, if it is collected, it will most likely take some time. The circumstances that got the tenant into a difficult financial situation must change, and he must be motivated to improve his credit rating before he will pay. Again, reporting tenant debt to Experian, Equifax, and TransUnion is very important if the debt is ever to be collected.
It is a mistake for a landlord to assume the debt they are owed by a previous tenant will never be paid. You have three options: go to court, turn the account over to a collection agency as a non-judgment, or simply report the debt to all three major credit bureaus yourself. Any of these three options could result in recouping some of the money you have lost.
Monday, August 31, 2009
Homes prices reaching a bottom?
Market Median price Price change Inventory
(7/07' - 7/09')
-------- ---------------- -------------------------- ---------------
W Pdx $355,000 -6% 9.8 months
N Pdx $230,000 -8% 5.1 months
NW $349,900 -8% 5.7 months
NE Pdx $255,000 -9% 5.1 months
Mil/Clack $265,000 -12% 6.8 months
SE Pdx $219,000 -13% 5.2 months
Beav/Aloha $227,500 -13% 5.3 months
Hills/F Grove $231,000 -14% 6.7 months
Tigard/Wilsonv $290,000 -15% 7.4 months
L Oswego/W L $386,300 -17% 11.6 mnths
Gresham/Troutd $214,000 -18% 8.6 months
O City/Canby $249,900 -18% 9.1 months
Source: Regional Multiple Listing Service *Median price on sales made from Jan to July 2009
NOTE: many consider 6 months inventory a neutral market ... less than 6 months = seller's market and more than 6 months = buyer's market
(7/07' - 7/09')
-------- ---------------- -------------------------- ---------------
W Pdx $355,000 -6% 9.8 months
N Pdx $230,000 -8% 5.1 months
NW $349,900 -8% 5.7 months
NE Pdx $255,000 -9% 5.1 months
Mil/Clack $265,000 -12% 6.8 months
SE Pdx $219,000 -13% 5.2 months
Beav/Aloha $227,500 -13% 5.3 months
Hills/F Grove $231,000 -14% 6.7 months
Tigard/Wilsonv $290,000 -15% 7.4 months
L Oswego/W L $386,300 -17% 11.6 mnths
Gresham/Troutd $214,000 -18% 8.6 months
O City/Canby $249,900 -18% 9.1 months
Source: Regional Multiple Listing Service *Median price on sales made from Jan to July 2009
NOTE: many consider 6 months inventory a neutral market ... less than 6 months = seller's market and more than 6 months = buyer's market
Thursday, August 27, 2009
Washington County Real Estate Stats for July 09'
Washington County Real Estate Stats for July 09'
Single-Family Residential
- 53% of homes were 3 bedrooms with an avg price of $255,575
- 42% closed in 30 days or less
- 20% closed in 121 days or more
- 48% used conventional financing
- 34% used FHA financing
total dollar volume up $18.5M from last month
Condominiums
- 20% sold were in the $140k to $160k range .... avg price being $158,065
- 35% closed in 121 days or more
- 21% closed in 30 days or less
- 46% used FHA financing
- 27% used conventional financing
- 17% used cash
total dollar volume up 1.7M from last month
Wednesday, August 26, 2009
Portland Metro Real Estate Stats, July 09'
Single Family Residential
- 53% of homes were 3 bedrooms - average price $259,753
- 39% closed in 30 days or less
- 22% closed in 121 days or more
- 48% buyers used conventional financing
- 32% buyers used FHA financing
- closings up 11.4% from last month (1782 vs 1599)
- total dollar volume up $147M from May 2009
Condos
- 19% sold were in the $200k to $250k range with average price of $234,273
- 22% closed in 30 days or less
- 35% closed in 121 days or more
- 48% buyers used conventional financing
- 25% buyers used cash
- closings up 17.5% from last month (208 vs 177)
- total dollar volume up $9.39M from May 2009
Call or Email Ted with questions or help with any of your Real Estate needs!
(503) 936-4468
follow on Twitter at NWsold
Monday, August 24, 2009
NWsold Blogging Begins
Let the blogging begin! In my new NWsold Blog, I hope to share and discuss Portland real estate and market conditions with you. Please feel welcome to comment and share as more posts are added. I am also active on Twitter as NWsold. You may subscribe to either/both accounts on my website. Thanks for visiting.
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