Category: Investing

Institutional buyers are buying distressed properties,…gigantic hoards

April 5, 2013

……If you think rapidly rising home prices is a good trend, you might want to think again.

………….Institutional buyers are beating owner-occupied traditional home buyers to the market. With gigantic hoards of cash at their disposal they are buying distressed properties, mostly those in foreclosure or through lender facilitated short sales, one at a time and in bulk where they can.

  • …. Blackstone Group (BX) has already spent more than $3.5 billion to amass a portfolio of more than 16,000 single-family homes. Chairman, CEO and Co-Founder of Blackstone recently said the firm was spending about $100 million a week buying homes.
  • Silver Bay Realty Trust Corp (SBY) is a newly spun-off  real estate investment trust, shed from its REIT parent Two Harbors Investment Corp. (TWO), that owns 3400 homes and is adding to its inventory of purchased-to-rent properties.

…but conceivably…. the first-in money will try and create a floor and push prices higher to sell out as high as possible……

story

10 Rental Home package coming to market

January 30, 2013

Not formally listed/ not in MLS, here’s a ready to go set of rental homes in good condition with a long history of care and occupancy. Contact for showing and cash flow information.

REAL ESTATE DEPRECIATION
Acquired Rented for:

 Taxes
yr.mo
FLINT ADDRESS RENTAL Portfolio —— ——
149 Linsey Flint Aug-87
3368 Springvalley o/s Apr-88
2715 Eaton Pl Flint Jul-88
2814 Eaton Pl Flint Feb-88
3030 McCollum o/s Feb-89
2814 Gibson Flint Nov-89
3062 Raywood o/s Feb-90
1131 Fulsom Flint Jul-90
2908 Eaton Pl Flint Feb-91
1489 Maria o/s Apr-93
——
======

Investment Landlording Concerns

January 16, 2013

You want to invest but are afraid you won’t get paid. You also realize that a lawsuit against that mean `ol landlord can make the most honest look for ways to sue. Enter the Self Directed IRA.

Lets summarize:

Concerns:

  1. Not get paid
  2. Lawsuit lightening rod
Strategies:
  1. Have prospective tenant get a Section 8 commitment before purchasing investment
    • &/or make offer on property subject to expected tenant getting Sec 8 approval – works with non foreclosure properties.
  2. Invest not as individual but as SD IRA / LLC holding title: actions would potentially be limited to the insurance policy related to that property –
    • Make sure you do not manage the property during occupancy of tenant or when they are home or tell them all the wonderful things you preformed on the property, then liability may be added to you as the one who built the steps

     

Want to learn more ?

  • Take a look at our Pinterest area for visual charts etc.
  • There is more info on our SD IRA page and FreeRent101.com sister site.
  • Consider attending a local SD IRA event – we’ll attend with you if you wish.
  • Give us a call. We’ll chat by phone &/or meet informally.

Michigan Right to Work – I smell appreciation

December 20, 2012

For us left in MI, here’s some sobering stats and realities. Per the Wall Street Journal:Anibal Group LLC RealtyNetWorth.com real estate broker Fenton Linden Hartland Lakefront Investments Consulting Management Tax

“Between 1980 and 2011, total employment in right-to-work states grew by 71%, .. in non-right-to-work states … 32%. .. in Michigan … 14% during that time…. inflation-adjusted compensation grew 12% in right-to-work states, but just 3% in the others….

…the bill he signed into law on Tuesday is “pro-worker,” …does not change any aspect of collective bargaining other than preventing employees from getting fired for choosing not to join or remain in a union and pay union dues or agency fees, which may go toward political causes they don’t support. Options are of course part of the reason America was formed, in contrast with communist & socialist economies.

The good news ? MI just became a RTW state – as such, we are now in competition for importing businesses & workers to fill new jobs. This should bring buyers where we’ve had sellers for so long. Those that are against this new law I can’t really agree with, to wit: “Collective bargaining still exists … workers are of course free to organize….”

[MI is the only state to loose population in the last 10 yrs…. the statistics go on and are overwhelming in their conclusion ….so what is this guy thinking >]    “…Democratic Rep. Doug Geiss threatened: “There will be blood. . . . There will be repercussions.”

http://online.wsj.com/article/SB10001424127887323981504578175263199214992.html

Secrets of House Flippers

December 5, 2012

To help pay for my way thru college, I had to learn to invest in property in my junior year. Here’s an article with some merits based on my years of rehab/reuse/renting out.

…. According to RealtyTrac.com, an online marketplace of foreclosed properties, investors flipped close to 100,000 homes in the first half of the year, making almost $30,000 per flip, on average.

  1. Assemble a team of experts.
  2. Look for potential.
  3. Do the math.
  4. Design for buyers, not yourself.

Related link: How We Made A Million Dollars Recycling Great Old Houses [Sam Weir, Mary Weir]

Real Estate May Be The Buying Opportunity of the Decade

November 14, 2012
INVESTMENTS ROI ~ COMPARE PROPERTIES

After you read the below article I posted in 2012, jump on forward to this:

Investing: then and now

March 29, 2018

 

… so said Time mag back in July 2011. Click here to check their logic.

I wouldn’t have called out the buyers quite so quick, but now I’m bullish on buying. Why now ? Here’s a couple Detroit area articles showing recent price movements.

BTW, nationally, the big increases are right now happening in the areas that took the biggest hits….no surprise in that, to wit: Miami, Detroit, Arizona, LasVegas…etc.

 

Better than “house hunters”

October 10, 2012

Before I rehabbed my first investment property back in my college days, I read and Anibal-Group-LLCs-RealtyNetWorth-Handyman-Short-Sale-old-housereread 2 books by the investing couple Sam and Mary Weir, e.g.: How We Made A Million Dollars Recycling Great Old Houses.    I remember taking a trip east to look up these addresses and see if it was all real – it was !

The books are a bit dated, but the ideas in them are not – still one of the best quick easy but realistic reads for the just starting out investor I can think of. Clients that retain me I actually give them a free copy of this upon request via Facebook.

Fast forward to the HGTV days. I’m not a TV watcher, but these guys seem to be the modern rough equivalent primer for the wannabe/current investor.  Here’s the quip and link:

” Property Brothers.” features people who buy a fixer-upper and renovate it into their dream home with the help of twins Jonathan (the contractor) and Drew (the real estate agent) Scott. 

decent article

 

Adaptive reuse / flexible use

October 8, 2012

I tend to look at properties from a “multi-use” perspective.

I might say to a prospective buyer client “will you ever work from home ?…have customers stop by ?…. want rent out part for future/retirement income stream ?… have retired parent(s) live with you ?… have a business & residence at the same location ?

In our up/down economy that has become more of the norm in recent years these are valid considerations. I prefer to start with “when will you move” or “what might cause you to have to move”, to help a buyer consider liquidity – and the “what if you can’t sell” perspective.

I’ve linked to an article on an adaptive reuse option that has always intrigued me. Converted factories turned dazzling homes

income property: a late-in-life retirement plan

September 18, 2012

“Income property can be an important bridge to retirement for those without quite enough to retire in the traditional sense,” says J. Camarda, a real estate investor, Certified Financial Planner, and Chief Investment Officer of Jacksonville, Fla.-based Camarda Wealth Advisors. Because real estate is such an inefficient market, it’s possible to find awesome bargains with a very high return on investment, Camarda says. And if you can manage the property yourself, you can collect more income.

Well, speaking from 2 generations of experience, I must agree. Dad helped put us through college with his investment properties that we would work on in the summer. When I got to college, I didn’t have enough funds to pay for the final year tuition, room and board. So I found a small house, cleaned it up over summer with a bathroom/kitchen gutting, and let 2 roommates pay 100% of my room cost. I held that for 10 years after graduation making a monthly income and having a nice equity build paycheck at the eventual sale. What did I do with the funds ?…bought local rentals for a new income stream closer to home. 30 yrs and some 50+ tenants later I can recommend this strategy if you have a mentor you can call on from time to time. ( ps, we’re available ! )

Feature article link

additional resources:

http://www.hgtv.com/income-property/show/index.html

 

What’s real estates current head and tailwinds

July 27, 2012

There are market forces that are going to shape the next few decades. You and I can be wise as to whether we choose urban rentals/ or rural vacation… city/ country… working class north/ retiree south … etc, etc. I’ve oft felt that if I’m buying in retiree FL for example, I want to be an old boomer that rides appreciation upward vs a young end of the line boomer holding property there when many are downsizing to a 6 foot plot.

I agree with these quips:

Essentially, the response to these trends will separate the winners from the losers in the real-estate market, said Scott Muldavin, a member of the group and president of The Muldavin Company, a consulting firm serving the real-estate industry.

“If you pay attention to them you will be able to beat the market,” he said.

more

Americans brace for next foreclosure wave

May 20, 2012

Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

“We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.

“Last year was an anomaly, and not in a good way,” he said.

more

Investors Are Looking to Buy Homes by the Thousands

April 3, 2012

…….The big investors are wooed by what they see as a vast opportunity. There are close to 650,000 foreclosed properties sitting on the books of lenders, according to RealtyTrac, a data provider. An additional 710,000 are in the foreclosure process, and according to the Mortgage Bankers Association, about 3.25 million borrowers are delinquent on their loans and in danger of losing their homes.

With so many families displaced from their homes by foreclosure, rental demand is rising. Others who might previously have bought are now unable to qualify for loans. ……..  more

Related story:

Now is a great time to invest in a rental – MSN Real Estate

realestate.msn.com/article.aspx?cp-documentid=23972039

If you’re thinking about investing in a rental property, experts say low home prices combined with low interest rates make this the best time in years to become a landlord. 5 specific tips

FED INCOME TAXES / Capital Gains Tax on Investment Property

September 28, 2011

Long-term capital gains (held more than 12 months) are taxed at a maximum rate of 15 % ( 5% for persons in the 15% tax bracket).

CAUTION: When investment property is sold, depreciation taken during the holding period is “recaptured” & taxed at 25 %.

  • Assume an apartment bldg. purchased nine years ago for $300,000.
  • The building represented 80% of the total.
  • The property is sold this year for $510,000 with selling costs of $10,000.
  • Depreciation, using a 27½-year life, is approximately $78,545 ($300,000 × 80% ÷ 27.5 = 9 years).

What is the tax liability?

For real estate, a giant spring clearance sale

March 26, 2011

Despite record affordability of homes, buyers are still spooked and staying on the sidelines 

..Existing home sales plunged nearly 10 percent in February to their lowest level in nine years. It was the largest drop since July. Forty percent of those sales were on distressed properties. And new home sales are on track to come in at just 250,000 this year, the fewest since the Kennedy administration, when there were 120 million fewer people in the United States….

Nationwide, forecasters expect house prices to drop at least 5 percent more this year.

..A recent study by Capital Economics found that 60 percent of sales are to foreigners and investors, most of them paying cash. In fact, in international real estate circles, the U.S. is viewed as the “new emerging market,”………..

Flint loosing more than any but New Orleans

January 2, 2011

Cities like Flint, Mich., have economies based on a single major industry. In Flint’s case, that industry is auto manufacturing. When that industry began to decline, Flint was unable to diversify to prevent a population exodus.

……..Since the American auto industry began its decline in the 1980s, Flint has consistently lost at least 10% of its population each decade. Massive layoffs and plant closings have devastated the city, and unemployment rates remain well into the double digits. more

Ask me how this affects investment in the area.

Make Money in 2011: Your Home

November 16, 2010

………..What to Watch: Signs of an improving market: three straight months of rising sales and a decreasing inventory of homes (a six-month supply is considered healthy; today it’s 11 months). A local agent or realtor’s association can supply you with that data.

Action Plan: Buyers. Don’t try to time the market perfectly. Even if prices fall a bit more in your area, mortgage rates could rise later in the year, offsetting the drop. Initially bid about 10% below what comparable homes have sold for over the past three months; go even lower if the area is rife with foreclosures………………….

Michigan foreclosure rates by ZIP Code…

November 15, 2010

Opportunities or scary realities ? The webmaster passes along these thoughts with the post/link: New administration in Lansing should make MI a changed economy in about 3 yrs ( ask me for my source ), the areas with the furthest drops should see the biggest opportunity for gains – we’ll we’ve certainly dropped, and current clients are loading up on rentals w/experiences that they feel favor the landlord….cheap properties/strong rents. Webmaster

Michigan’s foreclosure rate was the 5th highest nationwide for the month of October. About one in every 235 housing units in Michigan received a foreclosure filing. Nevada, Florida, Arizona and California were the top four states, respectively.

ZIP Codes in Monroe (48145), Van Buren (49027), Livingston (48139) and Oakland county (48178) had the highest foreclosure rates in the state last month.

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