Where Real Opportunities Are In This Market: Our Case Study

August 26, 2009

I know we have been silent for a while here at NoBullRE.com. Quite simply, we have been busy doing real estate for our own accounts. Depending upon your location, you may be sitting on a small gold mine and don’t even realize it. In this upcoming series of articles, we will be providing an overview of what we are finding in our own market: Tampa, Florida. From the discussions that we are having with others around the country, you may find your market to be similar (and profitable).

So, over the next few days, here is our list of topics:

1. How We Are Getting 2-3 QUALIFIED Buyer Showings PER DAY, PER HOME.
2. The Unspoken Market….Where To Find 100’s Of Buyers
3. The Investor Myth: Why You WON’T Get Real Homes At 50-60 Cents On Dollar
4. How You Can Safely Profit From Us (And Probably Others)

We are getting ready for a big house sale in Tampa so I will do the best I can in getting this material out on a timely basis. However, we believe that for many of you around the country, it is important to learn from what we are seeing on the streets daily. Hopefully you can learn from our experiences and then profit.

How We Are Getting 2-3 QUALIFIED Buyer Showings PER DAY, PER HOME

Ever single day, I get 2-3 calls from realtors wanting to show our homes to first time home buyers in Tampa. So what is our secret? Let’s explore the possible reasons:

1. We Are Selling Dirt Cheap To Home Buyers: No, list price is 92% of fair market (and appraised) value;

1. We Have Spent A Ton Of Money Upgrading This House: No, our total rehab cost were $9,2000 and consisted mostly of painting, flooring, small repairs,

1. We Are Paying Extremely High Commissions To Realtors: No, we offer 3-4% to selling agents, just like everybody else in town;

1. Our Internet Marketing Is Dominating The Area: No, although we are big on internet marketing, it plays very little role in the area with simply listing on MLS the dominate factor.

Give up yet? Boy, this would be the perfect place to pitch a brand new course and all you have to do is pay XXX to get our wonderful secrets….. but I will make it even easier for you:

THERE IS REAL MARKET DEMAND FOR THESE HOMES

Let me explain. As we started to do our homework around Tampa and meeting with realtors, we kept hearing the same story, over and over again:

• 80-90% of the for sale market is short sales & bank REOs;
• New first time buyers just want to buy a house, not wait 6-9 months on a short sale or have to pay cash for a bank REO (and then fix it up);
• Almost all other properties actually for sale by owners are priced too high because they are upside down

Simply put, if you have a decent house, in move-in condition, and not a short sale, it will get traffic (in the right areas). One thing that most people don’t realize is that there is a good volume of people out there that did not own property in this latest RE crash. These first time buyers are sitting pretty and just licking their chops to find a good home and be able to buy for less than they are paying in rent. Realtors in Tampa are telling us that this is the best market they have seen in 3 years. All the while, the newspapers are still full of gloom and doom.

So, here is a tip for you. If you are interested in an area or even an investment property that somebody is trying to sell, call three realtors and tell them you are considering acquiring a property and turning around for resell. Talk to them about the market, realistic prices, etc. You may find out that you have a great opportunity already waiting for you.

Home Builder Confidence Drops With Rising Rates

June 15, 2009

As reported in the Wall Street Journal today, the National Association Of  Home Builders confidence poll dropped due to rising interest rates.  In reality, rates are still very, very low but they have rebounded off their historical lows of a few weeks ago.

As reported by the WSJ:

A market sentiment index published monthly by the National Association of Home Builders dipped this month. The gauge reflects builder confidence in sales of new, single-family houses.

The drop in the NAHB’s housing market index reported Monday, to 15 from 16 in May, followed two months of increases that had nurtured hopes of a bottom to the housing crisis. Signs have surfaced this spring indicating the worst of the recession is past.

But mortgage rates have climbed in recent weeks, pushed by rising government bond yields. Investors are concerned about inflation because of increased spending in Washington meant to pull the economy out of recession. Freddie Mac data showed the average on a 30-year mortgage loan was 5.59% last week — 73 basis points higher than the average four weeks earlier of 4.86%, an advance that could hurt demand for houses.

via Higher Mortgage Rates Sap Builder Confidence - WSJ.com.

Foreclosures Down — But Are They?

June 12, 2009

We are getting some more mixed news this morning on national foreclosures.  On one hand, foreclosures have dropped compared to last month.  On the other hand, the number of foreclosures is above 300K which is still a HUGE number historically.  Now that the foreclosure moratorium is beginning to lift, we will definitely see some of this type activity for a while.

In today’s Washington Post, they write:

Foreclosure filings fell in May compared with the previous month, but remain at elevated levels, according to data from RealtyTrac released today.

The firm counted 321,480 filings nationally, which can range from default notices to bank repossessions. That was down 6 percent from April, but an increase of nearly 18 percent from May 2008. RealtyTrac, a private firm, says its data include more than 90 percent of U.S. households.

Despite the dip, this was the third month in a row that foreclosure filings exceeded 300,000 and the third highest monthly total since the firm began collecting the data in 2005, according to RealtyTrac. The company estimates that in a normal market, filings would fall to under about 100,000 a month.

via Foreclosure Filings Fall in May - washingtonpost.com.

As we move forward through the coming months, we will continue to see a lot of mixed data such as this.

Florida real estate crash means Tampa Bay homes are too cheap, report says - St. Petersburg Times

June 11, 2009

A new article lines up with what we are seeing on the ground in Tampa with probably some over correction in prices.  According to the article:

Tampa Bay area homes are too cheap. You read that right. According to IHS Global Insight, a economic forecasting company based in Lexington, Mass., our real estate is undervalued.

IHS took a measure of our depreciated home prices, population density, household income and historical attractiveness and insists our median home price of about $131,000 is 16.9 percent too low. Three years ago, when a typical home sold for $186,400, IHS deemed us 30 percent overvalued.

You can get the entire article below:

via Florida real estate crash means Tampa Bay homes are too cheap, report says - St. Petersburg Times.

Housing Inventory Drops Again - The Market Continues To Improve

June 10, 2009

A number of news outlets are reporting today that housing inventory, which is the amount of homes that are for sale, dropped 3.9% this month.  In some areas of the country, housing inventory is actually returning to almost normal levels: of course in others, things are very much out of kilter.

This ties in very much with our data that we recently showed in the Tampa market where cash buyers where going turbo.  See: Tampa Cash Buyers Fuel Local Market.  As market begin to return to normal, we are going to see lots of mixed signals (some good, some bad).

While we are not predicting an INSTANT market rebound, we are seeing consistent pieces of information that this market is trying to turn.

See Wall Street Journal Article On Housing Inventory

Professional Cash Buyers Are Buying - Are You?

June 2, 2009

As we continue our series of blog posts about the change in real estate markets, we will now show a little known “secret”.   What the average Joe is doing, and what the professionals are doing, are 180 degrees apart.  Again, we will use Tampa as our example but what we show is happening in many places across the USA.

So What Is Joe Doing?

Referring to the typical home buyer as the “average Joe”, let’s see what is happening.  What everybody “knows” in the market is that times are tough and RETAIL prices are dropping.  Referring to the figure below, we see that this is true in every submarket in Tampa.

Chart Shows 12 Months Of Data For Various Tampa Submarkets

NOTE:  This is RETAIL pricing.  Prices paid by investors is RISING.

So, with this happening, Joe still believes now is not a good time to buy.  Let’s also look at the number of mortgages being written but let’s go all the way back to 2005 as we started coming off the boom in Tampa.  Here is what those charts look like for conventional, FHA, and VA financing.

Clearly, Joe is still on the sidelines.

What Is Sue The Professional Doing?

As mentioned in a previous blog post, there is now BIDDING WARS between professionals when a house goes on the market priced right.  Let’s see if we can really QUANTIFY that.  One very good measure of professional activity is CASH purchases.  Typically pro’s move in with very low (or zero) financing so if we look at the number of cash purchases, it  give us some indication as to the direction of pro’s and knowledgeable individuals.  We can also verify by being in the market that this is EXACTLY what is really happening.

Referring to the figure below, we see that Sue was not buying in 2005 when Joe was buying everything in sight.  We also see that now Sue, the Cash Buyer, is now buying while Joe is bailing.  The typical example of the pro’s doing EXACTLY OPPOSITE what most people do.

Just for comparison purposes, let’s now put conventional financing and cash on the same chart.

NOTICE THAT THERE IS NOW MORE CASH BUYS THAN FINANCED!!!  If that does not tell you something interesting about the way the pro’s think vs Joe.

The Cash Buying Pro Is Now A Huge Percentage

A natural question to then ask is what percentage of sales is cash now, and in the past.  This is shown in the chart below:

From this chart, we can see that cash buyers are now nearly 40% of the Tampa Bay market.  If you ever wanted an inside look at what the “pros” are doing in a market, this shows you.

Predictions For The Future

While we don’t have a crystal ball either, let’s see what predictions that we might be able to draw from this information.

1. Cash buyers & pro’s are buying everything in sight right now;
2. Conventional buyers still see “gloom & doom”;
3. Inventory will be absorbed by the professionals given rents versus prices;
4. At some point (we predict 6-12 months), Joe will wake up and then realize they are about to miss a golden buying opportunity;
5. Once a significant number of Joe’s start to “get it”, then prices begin to rise again as they scramble to buy homes before prices “rise too much”.

The joys of a real estate cycle……. it is just too predictable.

The Market Is Changing - Part 2 - Historic Rental Returns

June 1, 2009

In our last post, we talked about bidding wars occurring for properties, at least from the professional investor community.

I know that seems strange to many but it is really occurring.

As we progress in this series of blog posts to really show you what is happening behind the scenes, the next consideration is the unbelieveable change in cash flow that people can get from properties.  While this is occurring around the country, we will discuss a case study in Tampa, Florida where we have been spending a lot of our time.

Tampa, Florida Case Study

Let’s consider a simple, 3 bedroom house located about 5 minutes from downtown Tampa.  This is just a bread & butter type home we love for our own portfolios.   We will take a look at what has happened as we have gone from the peak of the market in 2005 to where it is today.

First, let’s get to the punchline which is shown in the figure below:  THE EXACT SAME HOUSE HAS HAD A CASHFLOW CHANGE OF $700 PER MONTH!

As we will see in a moment, the current house can be purchased for $92,000.  When you factor in vacancies, etc., this still results in a 15%+ cashflow based on a 20% down purchase.  Back in 2005, you would have lost several thousand dollars a year in cashflow.

Why Is The Cash Flow So Much Better?

1. Are rents better?  Not really, the rental market has been pretty flat as can be seen in the figure below

2.  The principal & interests is MUCH LOWER because of pricing

In this particular example, there was a $430 difference just in principal & interest between 2005 and today.

3.  Taxes & Insurance Are Much Lower As Well

When all is factored in right now, on the EXACT SAME HOUSE, we go from something that is a bad investment in 2005 to something that is a great investment today.

But Is Now The Right Time - Maybe It Will Get Better?

In tomorrow’s blog post, we are going to look at what is happening in the cash buyers market….. which is comprised of mostly local and national professionals.  As you will see, there is tremendous movement there right now which is very likely to stabalize, and then increase, pricing levels for properties.

The Market Is Changing- Part 1- Bidding Wars Have Begun

May 29, 2009

You have to be joking, right?  Are you telling me that bidding wars are starting to occur for homes for sale?  In case you fell asleep for about 5 years, this isn’t 2004.

In all seriousness, this market is changing and local pro’s can feel it and are acting according in many locations across America.  The interesting thing is that the “regular” house buyer market is still weak but the professionals are grabbing properties like the San Francisco gold rush.

There are several things that are driving this and point to a recovery in the regular housing market:

• Bidding wars now for severely discounted properties;
• Record rental returns;
• Unbelievable amounts of CASH BUYERS moving in; and
• A 3 month trend started in regular home sales.

In this blog series, we are going to look at each of these 4 parts and provide real evidence that as a real estate investor, if you are not paying attention to this shift, you can be missing a once in a lifetime? opportunity.

Bidding Wars

Bidding wars are literally occurring for severely discounted bank REOs and short sales.  Consider this quote from a recent Pheonix Market Trends:

“We have a short sale coming on the market soon at a normal market price.  Currently it’s being prepped and he tenant is moving out, though we have put a few ads out there to see the reaction and create an auction effect which will possibly give us several strong offers to present tot he lender and get this property sold.  The response is quite amazing.  We have a long list of people just waiting for it to come on the market.”

In addition in Tampa Florida, where we are starting to do a lot of business, real estate wholesalers are now complaining that their offers were typically the only offer on a bank owned house….. Now, there are an average of 5 offers per home, if priced appropriately.

All the while the latest headlines in the popular media are still gloom and doom.  For example, the latest Tampa Bay Business Journal on the topic announced:

Home prices take a tumble in Tampa Bay region

As we will discuss in this series of blog posts, this is a very unique time where professionals are going EXTREMELY BULLISH while the main stream market is still asleep…… We like times like this

New Appraisal Rules and Regulations

May 4, 2009

If you have not already heard, as of Friday May 1st 2009, as one industry expert put it, “the complete lending landscape just changed!”  To bring that back in from a more macroscopic statement, the way that appraisal are performed for certain types of real estate has changed.  Welcome to the new world “after: the introduction of the Home Valuation Code of Conduct (HVCC).  The HVCC pertains to mortgage loans (originated from May 1st onward) that are intended for sale to either Fannie Mae or Freddie Mac. 

SO REMIND ME AGAIN ABOUT THE HVCC?
Last week’s article went over the Good, Bad and the Ugly of the Home Valuation Code of Conduct, and before I continue I wanted to remind folks of a few things about the HVCC. 

According to the Federal Housing Finance Agency (FHFA), the HVCC builds on existing Fannie Mae and Freddie Mac seller-service guidelines to “increase the reliability of appraisals” for loans sold to the both these agencies.

To make a long story short, the changes being implemented through the HVCC are really intended to protect everyone and are for the greater good (yes - “the greater good”) by setting requirements so that the individuals and organizations requesting the appraisals have no influence on the outcome of the actual appraisal itself. Thus, the HVCC:

 * Prohibits lenders and 3rd parties from influencing appraisals;
 * Requires lenders to ensure that borrowers get a free copy of appraisal reports at least three business days before closing;
 * Allows lenders to have in-house appraisers, so long as they’re completely independent of the sales staff and their compensation does not depend on their estimates or on loan closings;
 * Requires lenders to test a randomly selected 10 percent (or other statistically significant percentage) of appraisals and report any problems to Fannie Mae or Freddie Mac, which may force lenders to buy loans back from them;
 * Requires lenders to report appraisal misconduct to applicable state agencies;
 * Etc. and so forth.

In a nut shell, the HVCC sets guidelines to prevent real estate appraisers from being intimidated, bribed or otherwise influenced in their developing their valuation on a particular property. As you can imagine, there has been a lot of resistance on the HVCC throughout the industry; Real Estate Brokers, Agents, Lenders, Appraisers, investors, and even the end consumer are all going to be affected in one way or another.

WHAT KINDS OF PROPERTIES DOES THIS APPLY TO?
Now, as far as the types of real estate properties that this pertains to, we would need to take a closer look at what both Freddie and Fannie to say. 

For Fannie, the HVCC only pertains to conventional, single-family loans and NOT to multifamily loans, or to loans insured or guaranteed by a federal agency.  For Freddie, the HVCC also only pertains to single-family mortgages as well (no big surprise there).

NOW THAT I KNOW THE INTENT, WHERE CAN I GET SPECIFICS?
To start out with, a copy of the HVCC can be found on the Fannie Mae web site. 

To download a copy, simply go to the following website and once you are there, then click on the link for “Home Valuation Code of Conduct”:

https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/

Along with any new code or regulations comes the issues with interpretation of such.  Specifically, exactly what does the code mean and what can (and can not) be done.  To help along with that, the various agencies have put out Frequently Asked Questions on the HVCC.   At the above link for Fannie Mae, you have access to not only to the 6-page code itself, but also Fannie Mae has put together a nice list of Frequently Asked Questions and a replay of a recorded Webinar on the topic.

Some of the more interesting outputs from the FAQs include:

 * The Code does NOT specifically prohibit communication by a real estate agent with an appraiser;
 * The Code DOES prohibit an appraiser from collecting payment for the appraisal directly from the borrower;
 * The Code ONLY applies to Appraisals and does not apply to other valuation methods (i.e. automated valuation models (AVMs), broker price opinions (BPOs), tax assessments, etc.); and
 * The Code prohibits mortgage brokers from ordering appraisal services, but brokers may initiate the appraisal process on a lender’s behalf in accordance with arrangements made by the lender.

Interesting to see how this all plays out, what tweaks are made over the coming months, and how this will impact not only the end user, but also anyone in the business or industry as well.

Home Valuation Code Of Conduct: Investors Be Ready

May 1, 2009

Today marks a major change in the lending landscape and the way loans are sold to Fannie Mae & Freddie Mac….  Specifically, how they are appraised.

If you have not heard of Home Valuation Code Of Conduct (HVCC),just ask your favorite mortgage broker about it and more than likely their response will be something like:

&$#@%^&%$#^%$#@#$%^

(sorry, but can print what they really will blast you with)

In short, this change is designed to fix the evils of the past.

As always, there are good and bad sides to every change.  We will explore the good, bad and ugly of this new approach but first, let’s synopsize what it is about.

WHAT IS HVCC (Short Story)
So what does the code say? Basically, it’s that the people responsible for originating mortgages can have nothing to do with the appraisal process.

In addition, the code also:

* Prohibits lenders and third parties from influencing or attempting to influence appraisals.
* Requires lenders to ensure that borrowers get a free copy of appraisal reports at least three business days before closing.
* Allows lenders to have in-house appraisers, so long as they’re completely independent of sales staff and their compensation does not depend on their estimates or on loan closings.
* Requires lenders to test a randomly selected 10 percent (or other statistically significant percentage) of appraisals and report any problems to Fannie Mae or Freddie Mac, which may force lenders to buy loans back from them.
* Requires lenders to report appraisal misconduct to applicable state agencies.

You can download a copy of the HVCC at: https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvcc.pdf

WHY IS HVCC GOOD?
Let’s face it, the appraisal business has been a bit “rigged” over the last several years.

In short, only appraisers that could “get the deal done” were used on a repeated basis by mortgage brokers, realtors, and or builders.  It only makes sense that this is the way the system worked.  If you were a realtor, or even if you were a new home buyer, the last thing that you want is for your appraisal to come up short and the deal fall apart.

Since appraisals are somewhat subjective, the appraisers that always got called were those where the subjectivity worked out in favor of the deal.

However, many appraisers felt very pressured to make the deal work….. their future business counted on everybody walking away happy.  Of course we are now seeing some of the consequences of that type of approach with our current housing and mortgage crisis.

WHY IS HVCC BAD?
Because now your purchase or sale is a crap shoot.

Why?

Simply because appraisers will be pulled out of a “blind pool”.  From my personal experience, only about 20% of appraisers are good at their profession (you know, the ole 80/20 rule).

So you now have an 80% chance of a mediocre appraiser being assigned to your appraisal.  Are they really capable of determining the value?  I am skeptical.

In addition, most the incentives for the appraisers are now set up to appraise low…..  The safe play is to come in BELOW what you may be thinking is actual value.

CONSEQUENCES
HVCC will be implemented May 1, 2009.  Many people believe, myself included, that this is going to severely disrupt the home seller market, and investor market, for a period.

Everybody’s major hope is that soon, tweaks will be made into something that is workable for all in the industry.

Related articles by Zemanta

• Appraisers brace for industry change (appraisalnewsonline.typepad.com)

New Fannie Mae Investor Reserve Guidelines

April 22, 2009

I have been asked recently for some clarifications on the recent changes from Fannie Mae on Reserve Requirements when purchasing Investment Properties. As you may know, Fannie Mae has repeatedly changed its guidelines on this topic. Staying on top of this information is key as a real estate investor.

Per Fannie Mae’s February 6th Announcement:

When the borrower will own one to four financed properties (including the subject property) the reserve requirements are:
* two months of reserves on the subject property if it is a second home,
* six months of reserves on the subject property if it is an investment property, and
* two months of reserves on each other financed second home or investment property.

When the borrower will own five to ten financed properties (including the subject property) the reserve requirements are:
* two months of reserves on the subject property if it is a second home,
* six months of reserves on the subject property if it is an investment property, and
* six months of reserves on each other financed second home or investment property.

Note: The reserves calculation for a financed property is based on the monthly housing expense of the financed property. All reserve requirements are based on the new definition of reserves as defined in more detail in Fannie Mae Announcement 09-02.

So just as a numerical example, let’s say you want to finance an investment property costing $100,000 that will result in payments of $1,000 per month. Then your cash requirements will be:

1. 20% Down (typically): $20,000
2. 6 Months Reserve: $ 6,000
3. Closing costs: $ 2,500 (estimated).

In this example, then lender would be looking for $28,500 in your accounts to get approval.

You can click here for your copy of the announcement, or you can get it from:

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0902.pdf

Hopefully this helps clear things up for those of you confused on the new Fannie Mae Reserve guidelines for investors.

Good News For Short Sale Investors

April 6, 2009

Its Monday morning so do you want the good news first or the bad news?

Since we mostly hear bad news these days, let’s start with the good news for a change.  If you are a short sale investor, or someone considering getting into short sale investing, then you may be in luck.   A new report from the Department of Treasury shows that banks approved almost 3 times more short sales in the 4th quarter of last year as compared to the first quarter.

Referring to the table and chart below, we can see that this is really a significant increase.

One of the biggest complaints of short sale investors has been that the banks are dragging their feet in getting their deals done.  In part, this may be due to non-ideal techniques used by many short sale investors: there are some short sale investors that are getting a lot of deals done on a consistent basis.  Even still, it sure would help to ride a wave of increasing short sales by the lending institutions.

If you are thinking about investing in short sales, you may want to visit this video that we put together.

So What Is The Bad News?

The bad news is that in all categories of loan defaults, foreclosures where just not getting any better by the end of last year…. Gee, isn’t that a surprise.  While we will cover this topic in much more detail later, the short story (no pun intended) is that when you look at the number of loans that are

• 30-59 days delinquent;
• 60-89 days delinquent;
• 90 or more days; or
• Foreclosure in process,

all were going up over the course of last year.  Looking at those stats, you know that we are not out of the woods yet.  Unfortunately, many of these type detail reports are a few months behind so it is just one piece of the puzzle that we all need to be watching.

Poof - An Instant Housing Fix?

April 3, 2009

Regardless if you are bullish or bearish on this market, what if something was planned that could radically change the real estate market…… almost overnight.

On April 1st, we offered a poll to determine the percentage of people that are bearish on this market and those that are bullish.  The chart below shows those results as of the time this article was written.

Click Here To Register Your Poll Vote

Out of the people that participated in the poll, 21 indicated that they were bearish, while the majority indicated that they were bullish.  Unfortunately, in my opinion, there is no right or wrong answer…… you simply have to interact with the market based on your beliefs.

One of the comments we received indicated that the person believed that the “real bottom” was 2012 - 2013.  Unfortunately, none of us will know until 2014 if that is true.  For that person, with their beliefs, probably the right strategy for them is waiting until that date….. it doesn’t mean that their approach is right (or wrong), but at least it lines up with their personal beliefs.

But What If It Changed With The Stroke Of A Pen?

As a real estate investor, one of the difficulties that we face is that market conditions change much faster than we can react.  For example, many people were absolutely shocked at the rapidity that the real estate market stopped selling in mid 2005.

Now, let’s consider another potential event that could also have a major impact:  the Making Home Affordable (MFA) Initiative.  You can learn more here.  Under this initiative, some of the 3 to 4 million homeowners eligible for loan modifications could see interest rates as low as 2 percent.

I wonder what this could do to the current “conventional wisdom” prevalent right now with many professional real estate players.  Their view simplified is that:

• We are at the beginning of a wave of adjustable rate mortgage (ARM) Recasts;
• When these recast, especially option ARMs, tons more inventory will flood the market;
• This inventory will likely be in place for years to come.

But what if, with a pen stroke, that picture changes and now more people can stay in their home.  In turn, this means that we rapidly start to work through existing inventory, which then decreases supply.  Now, the building industry comes out of hiding, hires more people which then improves jobs, which increases demand, etc., etc.

PLEASE DON’T MISUNDERSTAND.  I am not predicting the above.  Most of the big money investors I know gave up on “predicting” years ago.  They make decisions based on the real data in front of them TODAY and when they see a deal that makes sense TODAY, and has a high probability of making sense TOMORROW, then they act.

Real Estate Investor Sentiment: The Bear & Bull Battle

April 1, 2009

A couple of weeks ago, we hosted an educational event for the REO & foreclosure world with several hundred people from around the country on the line.

We thought it would be interesting to see what the investor sentiment was given all the gloom & doom on the news.  We asked people how they were feeling about the real estate investment market.

Their choices where:

• I am bullish in this market and want to buy properties;
• I am bearish in this market;
• I am undecided

About 30 seconds after launching the poll, I was ready to fall out of my chair.  Well over 70% of the people responding were BULLISH.  Another 20%+ were undecided, and just a few percent where bearish.

Wow!   I was completely surprised with that result.  Given the news that exists out there today, I would have predicted a 3 way split….. Oh well, so what do I know.

As we launch NoBullRE.com, we thought it would be fun to do a similar poll here amongst the readers and let you see the results.  I know people are reluctant to do anything on the web but this is TRULY ANNONOMOUS and is really for everybody’s benefit.

Ok, I know it’s April Fool’s day but if you will, please vote how you actually feel so that everybody can use these results.

Vote To See Current Poll Results

Also, we would love to hear from you below and expound upon your thoughts and reasons.

San Francisco Area Sells 5,000 To Investors & Home Buyers

March 31, 2009

The market is totally dead, right?

Wrong!  Would you believe that about 5,000 homes are selling MONTHLY in the bay area right now.  Does not sound like the market is totally dead to me.

One of the interesting stats is that most of these homes sales are going to one of two categories of people:

• Investors; or
• First Time Home Buyers.

Let’s look at the first time home buyers first.  One of the things that has happened in the Bay area is the ability to use FHA financing for first time buyers.  Previously, the price points made this impossible but today, the FHA limit goes all the way to $729,250.  Personally I believe that is a bit ridiculous but that is besides the point.  So, with FHA financing, the buyer can put little money down and get into a fantastic deal.

The price points have changed dramatically as well in the area.  A couple of years ago, less than 10% of the homes in the area sold for under $300K…… Today, it is over 51%.

Investors are also finding good deals.  A recent article in the San Francisco Chronicle described how a real estate agent turned a quick $77,600 profit by buying a house with cash and the reselling.  While most investors are buying, then renting, then planning to sell in a few years, there is still a few flip type opportunities that exist.

This Is A Link To The Chronicle Article

Florida Existing Homes Sales Up —- Again

March 29, 2009

There is a interesting trend starting to develop in Florida with existing homes sales now up for 6 straight months on a year over year basis.

Existing home sales rose 20 percent last month, with a total of 9,858 homes sold statewide compared to 8,181 homes sold in February 2008, according to FAR.  February’s statewide existing home sales were 16.7 percent higher than January’s statewide sales.

You have to realize thought that many, many of these sales are coming from discounted sales.  According to the Florida Association of Realtors,

Florida’s median sales price for existing homes last month was $141,900; a year ago, it was $199,300 for a 29 percent decrease. Industry analysts with the National Association of Realtors® (NAR) report a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures.

From our perspective however, anything that reduces total inventory on the market is definitely a good sign.

Click this LINK to get a good chart of how each of the Metropolitan Statistical Areas (MSAs) did across the state.

Fannie Mae Increases Lending Caps

March 28, 2009

To help support the needed financial recovery, Fannie Mae has announced that they are changing their recent investor cap on the total number of mortgages under the same borrower. In the later part of 2008, Fannie Mae reduced the total number of mortgages that an investor can have from 10 down to 4! This resulted in investors scrambling for higher-rate in-house programs and even higher rate private funds for investing.

Now with the issuance of Announcement 09-02 by Fannie Mae, the cap has been temporarily lifted back up to 10 properties. While still sorting to the details, for properties #5 to 10, it looks like 75% LTV with a minimum of 720 credit score and above. The requirements apply to any investment property or second home loan being delivered to Fannie Mae, regardless of whether Fannie Mae is the investor on the borrower’s other mortgages.

You can read more details on this by clicking on the below link: http://www.gozoneonline.com/FannieMae0902.pdf

Remember that most banks, even with this rule, may still limit the total number of mortgages that you have with their institution. However with this said, it greatly opens the doors back up for investors in the GO Zone trying to take advantage of the benefits before the end of this year.

Given this temporary reprieve from Fannie Mae, the timing of the remaining GO Zone benefits, and based on previous Fannie Mae changes over the past 9 months, I suggest that any serious investor who has been wanting to invest in the GO Zone do so now before the cap rules change back and while you can still find high-quality and affordable opportunities.

Some Positive Signs For The Housing Market?

March 27, 2009

Two pieces of data have been reported recently that actually give a glimmer of hope for the battered housing market.

• New residential building permits ticked up 3% from January to February; and
• Sales of New, single family homes increased by 47%

While this is a long way from a rip roaring “Buy” signal, it is an encouraging sign for a change.

According to the Washington Post:

The number of newly issued residential building permits, which offers a glimpse of construction activity in coming months, ticked up 3 percent in February from January. Existing-home sales were up 5.1 percent, according to industry data released this week. And yesterday, government data showed that sales of new single-family homes increased 4.7 percent, the first increase in that market in seven months.

“Between the new and existing-home figures, we have seen a little bit of a pulse showing up in a patient that was thought to be terminal,” said Mike Larson, a housing analyst at Weiss Research.

Of course, most of what happens in housing is going to be directly tied to employment/layoffs caused by the economy.  All of us are simply waiting to see how that plays out.

Get The Washington Post Article

Fannie Mae Actually Helping With Short Sales?

March 26, 2009

You are kidding me right? A quasi-government institution actually doing something that makes sense and helping homeowners.

Realcomp II Ltd., Michigan’s largest Multiple Listing Service provider to real estate professionals, Thurdsay announced a partnership with Fannie Mae to create a pilot program for homeowners in fear of foreclosure or staring down the barrel of a short sale.

The program will help streamline the short sale process, making it easier for homeowners who are under water in their mortgages to sell, thus reducing foreclosures by allowing these homes to be sold rather than seized by a financial institution.

My personal experience is that the banks and related institutions are their own worst enemy in this foreclosure crisis.  As an example, we had a 1.4 Million dollar, cash offer on the table to buy a complex in SW Florida.  Even though the price was competitive, the bank never even bothered to provide any sort of reply to our WRITTEN offer.

Hopefully things are starting to change for the better.

Click Here For The Entire Story

Freddie Mac Feb investment portfolio up 34.7 pct

March 26, 2009

NEW YORK, March 25 (Reuters) - Freddie Mac (FRE.N) (FRE.P) said its investment portfolio grew by nearly 35 percent in February, after shrinking the prior two months, though late payments on loans it guarantees also continued to jump.

The government-controlled mortgage funding company said the unpaid principal balance of its mortgage-related holdings rose to $822 billion at the end of February, for an annualized 12.9 percent increase year to date.

Read Entire Story

291,000 Foreclosures in Feb. Creates Window Of Opportunity

March 25, 2009

Realty Trac has reported that there where another 291 thousand foreclosures reported in February alone.  And this is despite the government actions to date.

While this is not great news for homeowners, it does present some interesting opportunities for investors.

NBC put together a well written piece that is worth visiting.

SYNOPSIS

The growing inventory of distressed homes on the market may be sending shock waves through the economy, but it’s also giving investors a wider window of opportunity.

Despite federal initiatives to stem the rising tide of foreclosures, some 291,000 foreclosure filings were reported in February, the third highest monthly total since RealtyTrac began following the data in 2005. Such filings include default notices, auction sale notices and bank repossessions.

Over the last three years, more than 4 million U.S. homes have been sent into foreclosure.

Whether you’re an investor looking to purchase a rental property, or a homeowner who’s ready to retire and move someplace more affordable, the price of foreclosed properties right now is right,” says Debra March, executive director of the Lied Institute for Real Estate Studies at the University of Nevada Las Vegas, the nation’s leading state for foreclosures.

Read Entire Story

What About Title Issues?

March 22, 2009

Want to know a dirty little secret about Bank REOs and foreclosures that could cost you 10’s of thousands of dollars?

It is simply that most homes that are now in foreclosure have some form of title defect.  What does this mean you might ask?

Simply that there are disputes as to the legal ownership of the property.  As a result, it can be difficult or impossible for a new owner to sell the property.  When home owners go into foreclosure, by that time they frequently are behind on almost every other aspect of their payments:

• Federal taxes;
• Property taxes;
• Unresolved judgements;
• Mechanics liens.

A single recorded title blemish could literally cost you 10’s of thousands of dollars to repair.  Worse, usually banks transfer ownership to you via a Quit Claim Deed, which then means there is no recourse on your part.

One of the things that BankREOSpecialists.com does during its due diligence is to insure clean, marketable title for all our buyers.  Make sure that if you are acquiring properties on your own that you have a thorough title examination performed.

Property Appraisals: Declining Market Adjustment

March 20, 2009

California is considered a “declining market” by lenders, the secondary market, and appraisers alike. Appraisers have been instructed to adjust the “comparable sales”, on a Uniform Residential Appraisal Report (Form 1004), by 1.5% per month. What this means is that the appraiser will use an exact model match (same size, floor plan, and location in the subdivision) from December, and lower the price by 3%, for a current appraisal. For example, if the property sold in December for $300,000, the adjusted price in February will be $291,000.

Sounds reasonable, right? Sometimes, that’s not necessarily a fair depiction of current market conditions.

Much of the Southern California market is driven by bank-owned properties. The banks, in an interest of disposing of the property, pursue a “fire-sale” pricing method in order to generate multiple offers. Ask buyers in the tony San Fernando Valley how hard is is to buy a bank-owned home. One of our borrowers has made over 30 offers, unsuccessfully, to purchase a bank-owned property,

The free market has “priced in” future market declinations and has “discovered the true bottom”. Still, appraisers have their hands tied. Pursuant to directives from the secondary market, the appraisers adjust those “free market base prices” because they were closed a month or two ago. The cycle becomes never ending. The lower adjustments provide an unnatural price pressure, driving prices even lower. The policy then becomes a market factor.

The policy can be counterintuitive to its originally stated purpose; to provide a “true” reflection of this “declining” market. It assumes that prices will continue on an 18% annual decline, forever.

Read Entire Article

• Who Is "REALLY" Making $ In Today's Real Estate Market? Our 29,689 Members Tend To Agree... It's Usually Not The GURUs Have you ever noticed that every "Guru" real estate pitch sounds the same........ They once were poor, but now are rich working only 5 hours per week, and you can be rich too if you just buy their "can't fail system". Or have you noticed that every property promote has a can't miss proposition, if you just buy TONIGHT.  At the NoBullRE club, we are huge believers in real estate investing...... but we also know that every approach has two sides: Nothing is perfect.  If you want unbiased ("No Bull") facts of who is making money, how are they doing it, and where do they get their knowledge, then you don't want to miss joining the NoBullRE Club  IT'S FREE (FOR NOW) Name Email See What Others Are Saying SECURE & CONFIDENTIAL Your info will never be shared CONFIDENTIALITY GUARANTEED

•  

  Get Our Feed

• Categories

  • Distressed Properties
    • Auctions
    • Bank REOs
    • Loan Modifications
    • Preforeclosures
    • Short Sales
  • General Real Estate Investing
  • Investor Alerts
  • Investor Lending
  • Market Updates
    • Fannie Mae & Freddie Mac
    • Mortgage Market
  • Tampa Florida
  • Tampa House Pick Of Week
  • Tax Advantaged Properties
    • Go Zone
  • Uncategorized
  • Upside Down Mortgages

• Recent Comments

  • Antwan Stevens: You guys Rock, thanks for always adding value to...
  • Mary: Of course I agree with all the statistics, (More cash buyers...
  • Art House: As a person affected by the Florida market, I can say...
  • C. Rosenberg: Hey Chris, Respectfully disagree. Just like the stock...
  • bryan brey: bryan- in general good projections, yet I have two...
  • Bill: I have been leasing a home for nearly one year now and signed...
  • AgentsOnline: I think we have hit bottom on the plunge and home...
  • John: I’m an appraiser, and I know that a properly performed...
  • Bob Maves: On the Short Story: When were lenders able to influence...

• Tag Cloud

  Add new tag appraisal auction bank reo bonus depreciation Buy Cash flow discount Existing Home Sales Fannie Mae fixing title Florida foreclosure foreclosures Freddie Mac Good deals Go Zone Home Valuation Code Of Conduct housing investing investor Investor Lending investor loan IRS lender Loan loan modification making money market Mississippi Mortgage no bull real estate Properties property quit claim deed real estate real estate investing real estate sentiment REO Short Sales tampa Tampa Florida tax title what's hot