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Willy @ The Real Estate Project

Making Real Estate Happen

The Interest in ADU's

An Accessory Dwelling Unit (ADU) is a secondary residential unit located on the same property as the main residence. ADUs, also known as granny flats, in-law suites, backyard cottages, or secondary suites, provide a flexible housing option with numerous benefits for homeowners and communities.

1. Types of ADUs:

   There are typically three main types of ADUs:

   **Detached ADU: A standalone structure on the same property as the primary residence. It can be a separate cottage, converted garage, or newly constructed building.
   **Attached ADU: Part of the primary residence but with a separate entrance and living space, such as a basement or an extension.
   **Interior ADU: A unit within the primary residence, like a converted portion of the house, such as a basement or a section of the main house.

2. Purpose and Benefits:

   ADUs serve several purposes and offer various advantages:

   **Additional Income: Homeowners can rent out ADUs, generating extra income to offset mortgage or living expenses.
   **Multigenerational Living: ADUs allow for close yet independent living for family members, such as aging parents or adult children.
   **Affordable Housing: They can provide affordable housing options in high-demand urban areas, contributing to more diverse and inclusive communities.
   **Increased Property Value: ADUs can potentially increase the overall property value due to the added functionality and living space.

3. Regulations and Zoning:

   Regulations regarding ADUs vary by location. Many municipalities have specific zoning codes and building regulations governing the size, design, and use of ADUs. Some areas may require permits or impose restrictions on ADU construction to ensure safety and neighborhood compatibility.

4. Design Considerations:

   ADUs are typically designed to be self-sufficient and can include features like a kitchen, bathroom, bedroom, and living area. They are intended to be habitable and functional living spaces with all the necessary utilities and amenities.

5. Rental Considerations:

   If the homeowner intends to rent out the ADU, they need to consider factors such as tenant screening, lease agreements, rent pricing, maintenance, and local landlord-tenant laws.

6. Environmental Impact:

   ADUs can contribute to sustainability efforts by using fewer resources and reducing the need for large-scale development. They can also promote the use of public transportation and reduce the carbon footprint associated with commuting.

7. Popularity and Future Trends:

   ADUs have become more popular as a solution to housing shortages and rising property costs in urban areas. The trend towards densifying cities and increasing interest in sustainable and adaptable housing options is expected to drive ADU growth.

In Summary, an Accessory Dwelling Unit (ADU) is a secondary residential unit located on the same property as the primary residence. ADUs offer various benefits including additional income, multigenerational living, contribution to affordable housing solutions, and sustainability efforts. Regulations and designs for ADUs may differ by location, but they serve as a flexible and adaptable housing option that has gained popularity in many communities.

The Real Estate Changing Landscape

   The real estate market has changed a lot lately. Housing sales have cooled off a little as interest rates have increased. Buyers who potentially could have qualified for a loan no longer can. Some sellers have had to either reduce their prices, offer incentives or just pull their properties off the market for right now. We've also seen home buyers who were originally looking in higher priced markets now shifting their focus on buying in lower priced areas. This has also caused a sort of migration to other states and cities for affordable housing. 
   In several larger markets where investors had a high interest in rental properties, has changed since there has been a push by local politicians and government agencies to protect tenants from evictions when they don't pay their rent. This had pushed many smaller rental property owners to the point of financial distress and many facing losing their own homes as well as their rental property.  
   Where all this will end up, we don't know. It's anybody's guess of what's around the corner for real estate. Will there be a real estate crash like we saw back in 2007/2008? I don't know. I am seeing an increase in Notice Of Default filings and lenders requesting Broker Price Opinions on properties that are likely to become Bank Owned properties.      


What Is The Real Estate Market Doing And What Can We Expect

   From 2022 and forward for the next few years we can expect a lot of changes happening in real estate. As the economy spirals downward and interest rates increase, this has a massive affect on peoples buying power. The value of currency declines. It takes more money to buy something. As a result, homes are not getting sold. And other forms of real estate are not moving. If you are an investor, hopefully you sold as much of you inventory when the markets were up and stashed away money. Now that the market is headed downward, you should be ready to start buying new inventory to hold. 
   Typically real estate goes in a 7 to 10 cycle. It's hard to predict how long this current cycle will go before it takes an upward swing. I hear a lot of investors and potential home buyers say that they want to wait to see where the bottom is. That's not always the best time to start doing your buying. Even if you buy a property before the economy hits bottom, just remember that even if you paid a little more, you will eventually get that money back when the market rebounds. How well you do depends on how well you know your market and buying the right properties in the right locations. It's all a gamble, but you can minimize the risk in doing your homework now in tracking where the hot markets will be and what the property types will be.   

Going Out And Looking At Land

   In California and in some other states where growing and the usage of marijuana has become legalized has also caused a lot of illegal grow operations. Where I'm at in California there has become an explosion of both legal and illegal grow operations. Some operations will do their best to make it look like they are a legal operation and keep a low profile, while others will seek out distant remote locations to do business. This makes a problem for those of us who are interested in investing in land. We may drive out to a property and see a MJ grow operation and wonder if it is a legal or illegal operation. There's no signs that are going to be erected to let us know if we should keep our distance. Even legal grow operations are weary of strangers. When you are out there looking at land, proceed with caution and expect to have someone come out to where you may be or even stop you on the road that you are driving down and start asking questions of who you are and what you are up to. These people are more than likely going to be armed also. 
   What can you do to try to protect yourself from harm? Search Google Earth, stop by the Sheriffs or local police office and inquire about the area that you are going out to. Ask them if there have been any problems out there. Also let them know that you are planning on going out to a specific area and plan to be out there for a certain amount of time. Tell them that you plan to stop by afterwards to let them know that you are safe. Check with the County to see if they have an online database that you can look up to see what grow operations are legal and licensed in the area you plan on driving out to. That way if you see a grow operation off in the distance that you don't remember seeing in the online database, then you may want to steer clear of them. And because many of the grow operations are out in very rural remote locations, the road that you will be driving down will be a dirt road. As you drive down these roads you will be kicking up a dust cloud behind you. These grow operations will notice if someone is driving down the dirt road towards them. This is why I said to expect to have someone either come up on you or stop you on the road and start asking a bunch of questions. And if you start flying a drone, you can expect even more suspicion or even have someone take a shot at your drone to try to shoot it out of the sky.  
   Be safe out there when you venture out to go look at properties in rural areas. I've been to areas that 4 years ago would have maybe only had 3 or 4 people out in an area that now will have 20 grow sites.      

Tips to picking up a residential property easily.

2021 projects an unknown real estate future. Then again, every year is an unknown.
The tarot cards and crystal ball all indicate the planets are lining up for a real estate fiasco this year and into the next couple of years.  
We still have a COVID issue going on, a vaccine that many people are hesitant to line up and get, and a new far left leaning government for the next 4 years. 

We are looking at a ballooning real estate bubble that could potentially pop at any time once lenders get the green light to start filing foreclosures against defaulting homeowners. 
Here's my list of what you can do as an investor to pick up properties. 

1. Get to distressed homeowners before the lender can close on a foreclosure. You don't want to be trying to buy a foreclosed property on the courthouse steps or as an REO. Lenders will want market value for those properties.   
2. To locate distressed homeowners, there are online services that you can sign up for that will get you that information. The cost varies from company to company. 
3. Educate homeowners on the importance of saving their credit. Once a "foreclosure" gets on their credit, they will have a hard time even to qualify to rent an apartment. 
And once a lender forecloses, the problems for the homeowner are not going to just go away. Lenders will sell off the bad notes (loans) to creditors. And those creditors will hound the homeowner for years trying to collect any money they can. 
4. Offer the homeowner some sort of incentive. Money for moving costs. Arrange a moving truck for them. Work with other investors and real estate agents to get an apartment for the homeowner. 
5. Get the property owner to sign an agreement to be able to talk with their lender.   
6. Get the owner to deed the property over to you. This can be done by quit claim deed and some states allow for assignments as a form of transferring ownership. 
7. Once you have acquired a property, have cash on hand or access to cash to bring the defaulted mortgage current. 
8. Don't be afraid to talk the the lender and try to negotiate a deal to bring the defaulted amount current. WARNING, be careful in disclosing that you have taken over the property. Use your best judgement on whether to disclose or not. I say this because most if not all mortgages have a "due on sale" clause that the lender could use against you to get the loan paid in full. For the most part, the lender will be happy just to get the defaulted amount paid up and start getting payments again. 


Have fun and happy hunting for properties. 


What Is The Future Of Real Estate For 2021?

That's a very good question. 
Depending where you live in the United States can have different outcomes. 
I'm currently living in California, but because of the train wreck of California politics, I will be moving. 
We also have a new President and Vice President. Both of who are know for their extreme Left thinking policies. Kamala Harris was the AG for California a few years back and when I contacted her office for help on a situation with an out of state company that was hiring agents to perform Broker Price Opinions for them, they would not pay the people. Her office was not interested in my complaint. I got a letter back from them that I wished I had saved it. Because I was a small business and would not be a benefit or value to Ms. Harris's political ambitions, they were basically not interested in helping me. I was kicked to the curb. I'd like to kick her to the curb. 
Enough of my political ranting. Back to the subject. 
With COVID running rampant, government demanding businesses close, people being told to stay home and no one working, no one has any form of income. Bills are not being paid, mortgages and rents are not being paid. Investors of rental properties can not evict non-paying tenants. Lenders have been told that they can not foreclose on properties. But the day of reckoning is around the corner. Depending on where you live, there are judicial and non-judicial foreclosures. This dictates whether a lender must first file a Notice Of Default (NOD) first, giving the homeowner or investor to bring their defaulted payments current or if the lender can skip the NOD requirement and go straight to the foreclosure. 
Home prices seem to be stable and in some areas even increasing slightly. But are we hedging on another real estate bubble ready to pop? Several investors I know and have watched online are all indicating a collapsing real estate market. The market will flood with REO's causing values to plummet. 
If all this comes true, you'll want to have cash to start grabbing up properties. You'll want to get to potential sellers before the lender is able to close on a foreclosure. Let potential sellers know that if they let their property get foreclosed on that it will impact their credit history. Educate these pre-foreclosure sellers about signing over deeds to their property to you to avoid impacting their credit. Some may even be willing to just sign over a deed and walk away. If they are slightly hesitant, offer them moving money. But always enforce that if you take possession of their property that you are also taking care of their defaulted mortgage liabilities. Yeah I know, the majority if not all home loans have a "due on sale" clause. But let me tell you, the majority of lenders will turn a blind eye to that once you start waving cash in front of their face.  
If you are an investor sitting on some properties, and have not defaulted on the mortgage, don't panic and hold on to your property(ies). The values may go down, but they always rebound. Sometimes creating an even stronger growth market.            

LAND - The New Frontier

Investing in land is one of the easiest forms of getting into real estate investing. Now with that said, you have to know what you are doing, what your short term goals and your long term goals are. There are many places where you can go to learn about how to buy land and how to invest in land. Going online of course is the most popular. There are land investing groups that you can join, there are online marketplaces to purchase books about buying and investing in land and videos that you can watch. 

  • Online "gurus" who will pitch training courses to help you in buying and investing in land. They will tell you that by buying their training program will shorten your path to riches. Then they hit you with the cost of their training program. Maybe they'll tease you with a very low initial price to get the basics of how to make millions in investing in land. That gets you hooked. Then they hit you with that if you want the "special" contracts, intensive training videos and a one on one with a personal trainer to plot your future success will come at an additional cost. Then they ask you that if you are 100% dedicated to enrich your life ASAP, join their mastermind group. Hang on to your wallet because the cost will knock you off your feet. These so called "gurus" are only selling you what you could have searched online and gotten for free. All they are doing is taking that information, repackaging it and putting that information in their own words and telling you that it is the latest and greatest and that no one else is doing it their way or that it's "Their Secret Way To Making Millions".   
  • Buying books. You can get a lot of information at a fraction of the cost of what a "guru" would be trying to sell you on. There are many online marketplaces where you can buy books about investing in land. Then it's up to you to take the time to read those books. 
  • Real Estate Investing Groups. There are several out there. Actually there are dozens and dozens of groups about wholesaling or flipping houses and commercial properties, but not too many about land. Maybe there's a few more now. I do recommend joining a group. Everyone in a group is there to help each other out. The information is FREE and so is the support. There are online groups available via social media platforms and if you live in a larger city, there are usually groups that once or twice a month will meet at a coffee shop or restaurant. 
  • Do it all on your own. More power to you if you have the ability to go online and research everything yourself. To get out there and hit the pavement or dirt road and learn by trial and error. That's how I learned. I had nobody at my side to help me or to ask questions and get answers from.  

So set aside some time, write down your goals with investing in land. If you run into a roadblock or feel stuck, search out a group to join. You can buy land cheaply and sell for quick cash or for more expensive parcels, set it up so that you can accept monthly payments over a period of time. I currently have deals where people are paying me as little as $200 every month for the next 8.5 to 10 years. Do that 10 times and your making $24,000 annually. And depending where you live in the US, that's not bad income. 

Tenants, Evictions and Investment Property Owners - Massive Problems

Rental Properties!!!
     There are many rental property owners who own 5 or less properties. Many of these property owners have loans on those properties because they took out a loan to buy the property or they leveraged equity to purchase other properties to use as rental properties. And because of the COVID-19 pandemic, many renters don't have the ability to pay rent. As a result, rental property owners now also don't have the ability to pay and loans on their properties. The rental property owners can't evict tenants since they are protected due to the current pandemic conditions and government intervention. 
     All of this leaves rental property owners in a very bad position. One that could cause many to just walk away from their properties and leaving the lenders to deal with the tenants. Lenders are not in the real estate business, but in the money lending business. So this leaves lenders in a situation of potentially hiring property management companies until the properties can be foreclosed on and sold at the trustee sale.
     Unfortunately you have a tenant who is stuck in the middle going from one day to another not knowing what the future will hold. There could come a day when they get notice that they are being evicted and no longer protected by the government. And even if a rental property owner is able to hold out, the property owner is going to want to be paid for all the back rent that will be due to them. And the tenant is not going to have that pandemic eviction protection to keep them from getting evicted. 
     It's going to be interesting to see how all this works out.   

Is There A Real Estate Crash Coming?

     We've been going through a long lock down with the current pandemic. For awhile the lock down raised and then we were back to a sort of lock down again. Either way, there have been people out of work and/or on a layoff. People haven't been able to make their mortgage payments. The government stepped in requiring mortgage servicers/lenders to offer a "loan forbearance". If you are not sure how Forbearance works, it allows you to ask your loan servicer or lender to miss some payments in return you will get caught up at a later agreed time down the road. Well, at the time I think the agreed time frame was 4 months. That time has come and gone. Now the lenders and loan servicers are expecting to be paid. Unfortunately, many homeowners don't have the money to pay to get caught up. Some lenders and loan servicers did accept the terms of rolling the delinquent amount on to the back end of the loan, but for the most part, lenders or loan services wanted the homeowners to get caught up when the 4 months were up. 
     Now we have a situation where homeowners have not been able to get caught up on their house payments. Lenders and or loan servicers are now filing documents of "Notice of Default". An NOD is the legal action to let homeowners know that they are behind on their house payments. How long they will let that go varies from one lender to another. I've seen some lenders only wait 30 days while others wait years before filing a Notice of Trustee Sale. The NTS is the legal notification to the homeowner that the lender has started a legal action to foreclose on the property. The time frame on that is what I like to call the 3 and 3. "3 months and 3 weeks". 
     With all these homeowners not having the ability to get caught up on their house payments, we are looking at a huge foreclosure crisis on the horizon. This will have a huge impact on real estate. I'm not sure how the economy will be impacted, but I'm sure there will be some sort of impact. The only way to avoid a real estate market crash is if  the government steps in and forces lenders and loan servicers to rewrite loans.     

Investing in mobile homes

You may have seen a lot of ads for investing in mobile homes. 
Is it possible to make a living flipping mobile homes? It depends on where you live. Areas where there are several mobile home parks can be lucrative if you are willing to get out and hustle. You're going to want to stay away from areas where the mobile home is on owner owned land. The reason being is when a mobile home is attached to land, it is considered. So unless you have a real estate license, there is a good chance that you can not sell that property. Mobile homes on leased, rented land or in parks are considered personal property and therefor can be sold just like if you were selling a car or bicycle. 
Some things that you are going to want to become familiar with:

  • assignment contracts
  • sales contracts
  • mobile home park rules

When it comes to mobile home park management, they can be a real pain in the ass. I recommend not even mentioning that you are an investor and plan to flip some mobile homes within their park. You only want get the park rules so you have something to work off of when dealing with a potential buyer. Because depending on where you live the parks can have certain income requirements to be able to rent space in their park. In the Los Angeles area many parks require potential renters to have a monthly income 3x's the space rent. 

Contract assignments are typically straight forward. You're just a middle man who will collect a fee from the buyer (usually another investor) for a mobile home. You'll want to understand the assignment contract. You may or may not want to let the seller know that you will be assigning the contract to another person. Check your county or state on the rules when it comes to disclosure. Because you don't want to make the seller think that you misled them. Your contract fee can be as little as a couple hundred dollars to a few thousand dollars. You set your rate as to what you want out of the deal. But don't be so greedy that it will kill the chance of a sale. 

Sales Contracts: Let's say you buy the mobile home, do some repairs and now you want to sell the home. Get to know what is required as an owner to sell your mobile home. Many states or counties have certain disclosures that have to be completed by you and given to the buyer prior to closing the sale. You'll also want a copy of the park rules to give to the potential buyers. They typically need to get pre-qualified first before they can move forward with the purchase. Have the buyers put a security deposit in an online escrow account. So that once you know that they have been qualified then they can increase the escrow account with the remaining funds to complete the sale and release the funds to you. Another thing that you will want to get very familiar with is where or with who the sale needs to be recorded with. California has an online site with the State to record mobile home sales/transfers. 

Contract assignments are great for those that don't have the money to buy a mobile home and are looking for quick cash. Those of you that have the funds to buy a discounted mobile home have the ability to make the most amount of money. But everybody has to start somewhere. Start with assignments and get to know the game of flipping mobile homes. After that the sky is the limit. I've bought mobile homes and do "seller financing" for buyers with limited cash. I like the consistent monthly income and you can actually get more for your home because those buyers don't have the bargaining power to ask for a cash discount. 

Happy hunting or fishing and go find some mobile homes to flip or sell. 
Remember this is work and get good with marketing. Good marketing will have sellers and buyers contacting like there is no tomorrow. You'll actually have more buyers and not enough homes to sell them. That's my experience. So I'm always on the hunt for more inventory. 

Buy Land For As Little As $100 ??????

Can you really be able to buy land for as little as $100?  YES. 
You may ask, How is that possible! Where here are the details:

  • You need to be able to have access to search parcel numbers and look up the owners of those properties. 
  • Someway to be able to get the parcel numbers of the properties that you are looking at. 
  • You need to be able to go online to the county assessors office to cross search for tax delinquent properties. 

What I do is I pick an area that I have an interest in. Being in real estate, I have access  
via a title company to be able to search land parcels that will get me the parcel number and the owners name and address. There are some companies where you can get paid access to this information. Search online, there may even be ways to get the same information for free. This whole process takes work. Now you're going to be bouncing back and forth between the parcel number information and the county tax information. You're going to want to be looking for land that is 3 to 4 years in arrears in taxes and where the owners live out of area or out of state. Look at the dollar amount that the owners are behind in. You don't really want something  that is several thousands of dollars delinquent. Unless it is a property that has a high value and you know that you can get a buyer for it quickly. Use one of the online sources like Zillow, Realtor or public MLS access to see what sales have been for similar properties. I prefer that you use the public MLS access over the other two. You'll get more accurate sales information. Now before you go rushing off and mailing letters making offers to buy the land, you need to start doing the numbers.

Here is a hypothetical example:

5 acres in a rural area outside of the city limits. No utilities or anything. Just raw land accessible by dirt road. Amount owed in back taxes is $1,200. You see that in the last 12 months similar parcels have been selling between $5,000 to $8,000. I always recommend driving out to the property. Walk the property. Look for things that could be a problem getting the property sold. Look for natural washes that run down the middle of the property or too many Joshua Trees on the property. Check and make sure that the area is not in a protected plant or animal area that could hinder a sale. If everything checks out OK, mail off that letter offering $100 or $200 or $300 to take over the property and take care of the delinquent property taxes.
The owners have accepted your offer. Now what? There are a couple of different ways that you can take title. You can have the owners sign over the Grant Deed or Quit Claim Deed it to you. No need to get a title and escrow companies involved. That's just unnecessary 
money that you don't need to be spending. Head over to your County Recorders Office and have the transfer recorded. Now that you own this land, now what? 

It's time to get your new property sold. Let's just say that you ended up paying the owners $300 for the property. So you're $1,500 into the property now. And now you're saying, "but Willy, how am I going to make any money?" Well, you already know that similar properties have been selling between $5,000 to $8,000. Here's where the creative financing comes to play. $100 x 60 payments = $6,000.  $150 x 36 payments = $5,400 or $150 x 60 payments = $9,000. $200 x 36 payments = $7,200. Keep the payment schedule between 3 years (36 payments) or 5 years (60 payments). And if you can, get the buyer to put a down payment that will cover the delinquent taxes and adjust the payments accordingly. Otherwise just go the flay monthly payment. Use Craigslist to advertise your property for sale. Search online for other sites to advertised for free. ZERO DOWN $100 Per Month. (or $150 per m. or $200 per m.) 
You may get the call, like I get sometimes, from someone saying that they can buy a similar property for $3,600. You know what I tell them, "Why are you calling me then? Go buy that property! I'm dealing with buyers who don't have $3,600 in cash, but that can pay $100 or $200 or whatever a month". 

"But Willy, I have a Buyer now! Now what do I do?" Now it's time to draft your Contract for Deed. I use Rocket Lawyer, but there are others online that you can use like Nolo. I like Rocket Lawyer because of it's ease of use. Get the Contract for Deed recorded also. Set up an online back account like GoBank or PayPal where people can go online and make their payments. Make sure that they use the parcel number in the notes. That way it makes it easy to keep track of who has made their payments. I'm a big Google user and like to use Google Docs to create a spreadsheet to keep track of the accounts and payments. You can use Office or OpenSource or any other program that allows you to be able to create a spreadsheet. The main thing is that you want to have some sort of spreadsheet to keep track of payments, especially is you have payments from several properties coming in. The reason why I like to use the Contract for Deed is because if a Buyer should ever default (stop) making the payments, you can take the property back without having to go through the whole foreclosure process. Turn around and put the property back up for sale again and do the whole thing over again. As the Buyer pays off the property, you just sign over the deed just like when bought the property and make sure that you get the transaction recorded also. 

** This type of transaction can be done in the State of California and in a few other States that I know of. I know other investors have said that a Contract for Deed can be used in every State. Please verify that your State does allow the usage of a Contract for Deed when privately selling real estate.       

Is There A Future For Real Estate Agents

     Real estate has been going through some massive changes in the last 12 months. So the question that has been brought up, "what is the future for real estate agents?" More people have been getting into real estate thinking that it is a way for "easy money". As a result the real estate market is flooded with agents. In time a few will drop out once they realize that the "easy money" is not so easy to obtain. I personally know 3 that have already dropped out of real estate. The sad thing is this one agent tried so hard to make real estate work that he lost his home to foreclosure. One agent had a cleaning business prior to getting their license and has since gone back to running their cleaning business. And the last agent is a teacher who thought that working as an agent would be great for additional income when students were out of school for Summer break. This Summer that agent is now teaching summer school.

     So what are some of the changes that I have seen recently: 

  • There are many more of these so called 100% Brokerages.
  • There are a growing number of  "real estate companies" where the business model is not as a "brokerage" and agents are employees and may not always need to be licensed or be a part of a local REALTOR Association. Their business model is similar to that of commercial real estate and business brokerages.  
  • There is a grass roots push to end all local REALTOR Associations and operate only under one Statewide Association. In California that would be California Association of Realtors.
  • It was announced within the last couple of months by Gary Keller that Keller Williams would be restructuring how they do business. They intend to change their business model to that that would give a client that "one stop shopping" experience and thereby be able to provide services at a reduced cost. Saving clients possibly thousands of dollars when buying or selling a home. 



Is There A Real Estate Bubble Brewing?

There are a lot of indications that there could be very well another real estate bubble pop on the horizon. As an agent who does Broker Price Opinions (BPO's) for several major lenders, I have had an increase in the number of BPO orders starting from back in September. Every month the number of orders that I get weekly has been increasing. I have also been tracking foreclosure activity. That has been increasing also. It's known that real estate goes in 7 to 10 cycles. Following that information, we are due for a down swing. The thing is in many areas there is a low available inventory of homes for sale and market values keep increasing. I'm also seeing a lot of new residential construction going on. Interest rates are still low also, but lending qualifications are stricter. And as a result not as many people can qualify for a home loan these days. Only time will tell where real estate will go.    

What Does The Future Hold In Real Estate Investing?

     I'm asked this question all the time by investors. I even ask myself it. No one knows for sure what is around the corner. Real estate is a constantly changing environment. Market values can increase and decrease within 30 days. Seasonal changes will also affect real estate.   
     From my experience, real estate goes in 7 to 10 year up and down cycles. Other influences like Presidential elections and local elections can affect real estate. Uninformed voters have voted in taxes thinking that they were doing the right thing or having been mis-lead into thinking that they were voting for something that was going to benefit them. Case in point, the recent increase in sale tax in Los Angeles County. This is something that the "people of Los Angeles" voted for. As a result some cities in LA County now have a sales tax that is over 10%. Other cities are not far off from that. And then you have the politicians in some cities and at the State level who recently approved to add a real estate transfer tax to all real estate transaction. This was done in the name of reducing and providing homes for the homeless and those who are considered "low income" aka "Section 8" recipients. 
     The new real estate tax that will be added to all real estate transactions is surely to affect real estate here in California. And as a result will affect those who invest in real estate. This added tax will also have an affect on market values. I'm not sure which way the values will go except maybe upward as sellers will attempt to cover this new expense that they will have to pay for. I'm sure many sellers will try to shift the costs to buyers. And as a result this may push buyers to request increased assistance with closing costs from sellers. Anyways, when it comes to investors, they will surely increase their asking prices and also look to doing business in other states.    

Open House or Broker Open that is the question.

When listing your home for sale, is the agent going to hold some Open Houses or a Brokers Open?


Here are a few things to think about if your Realtor is going to have an Open House.

  • 1. Will your agent be the one holding the Open House? In many real estate offices there are agents who primarily work in getting listings while there are agents who only work with buyers. Those who host Open Houses are usually there to build their buyers database. Many times it is a new agent to either the real estate business or to the area. It's a known fact that very few of those who go to Open Houses actually buy that house.
  • 2. Open Houses opens your home to total strangers. Do you want total strangers walking around throughout your home? Your neighbors may show up wanting to have a look inside your home. They have no interest in buying your home. They just want to see how you live and what type of furniture you have.
  • 3. Safety and security. Open Houses allows potential criminals into your home. While they are touring your home they are also looking at if there is anything worth while to come back for. They'll be checking out to see if you have a dog and or an alarm system. There are also safety concerns for the agent who may be holding the Open House. Many real estate offices have started implementing that 2 or more agent be working together. In the last few years there have been agents who have been robbed, sexually assulted and killed while holding an open house. 


A Brokers Open.

  • 1. Brokers Opens use to be primarily for exclusive luxury homes. That has all changed. More and more listings are being shown by a Brokers Open.
  • 2. A Brokers Open is a controled and safer way to get your home seen by area Brokers/Agents. These agents will be able go back to their offices and contact any of their clients who are looking for a home that has the same things that they are looking for in your home. Your home will be seen by pre-qualified buyers who for one thing can afford to purchase your home if they really love it.


So, once again, Open House or Brokers Open. I'm all for a Brokers Open and I hope you think so to. 

Should I Invest Or Not?

Things to think about when considering real estate investing In Land:


  1. Why Land ?  Land is not going anywhere anytime soon.
  2. What To Look Out For. When looking at land there are a few things to look out for. Like access to the property. Is access via a dirt road or a paved road. If access by a dirt road, is it a maintained road by the County or by other owners in the area. Walk the property and look for any corner markers. Look for anything like a wash that goes through the property that could  make the property only partially usable. Look where the utilities are if there are any. Bringing power in to a property can be quite expensive. All these things can affect price and desirability later on when it comes time to either sell or build on a property.
  3. Do Research On The Property.  Always check with either a title company or with the County on the land use ability. Sometimes the zoning may only allow a specific usage. Title companies can also provide you with an easement map that will show where the utility right of ways are and any other easements that may be on the property like set backs for a road.
  4. A long Term Investment. When you buy a large parcel of land or even a smaller city lot, your investment is typically a long term investment. Land does not sell quickly and usually requires extensive marketing.
  5. When You Want To Buy. Depending on the price and size of the property that you are thinking of buying should determine whether or not you should use a title company and escrow for the transaction. You always want to make sure that the person selling the property has clear title. Meaning that there is no cloud on title.  And what I mean by "cloud on title" is that there are no liens on the property or that the person selling the property is the only person on the title and no one else. I have seen instances where there were several people who had a percentage ownership interest in the property. To become the full owner you would need to get all the other people to acknowledge on the purchase contract that they are giving up their each and own percentage ownership in the sale. The more complicated the deal, the higher the price, the larger the land and any question as to ownership should entice you to use a title company and escrow in your purchase. Now with all that said, it is possible to buy a parcel of land for a couple of thousand dollars or less and have the Seller deed the title over to you and you go down the County clerks office and record the new ownership.
  6. When You Want To Sell. If you didn't do it when you first bought the property, get a file started. Know where the Deed to the property is and have it in that file. Determine an asking price. To help you with that ask a Realtor or look on Zillow for recently sold properties that are like yours. Always use Sold properties as your comparables for determining an asking price. I've seen far too many people going by what other people were listing their properties for only to sell far less than what they were asking for. The price at what market values are are what people will pay for a property similar to yours in your area. If you price too high, you will never get any interest in your property. Be open to Seller Financing. I have sold more properties with Seller Financing than any other way. Your Seller Financing can be short term (3 to 5 years) or long term (10 to 20 years). Use low down payments and low monthly payments and balloon payments. Market your property for sale everywhere you can think of. Craigslist is a good source for buyers. Just know that you don't have to list your property with a Realtor, but offer a commission incentive to a Realtor to bring you a buyer. There are many online sources where you can market your property for free.  

The Underground Real Estate Market

It's been known for some time that there are pocket listings and "off market" listings. In the last couple of years, following the real estate collapse, this "grey" market has really taken off. Especially when it comes to commercial real estate, is now including residential properties.


A short fact: Realtors are required to list their listings on the MLS within 3 days. But there is a clause in the listing contract that allows an agent to keep a new listing off the MLS if the Seller chooses so. The key word though is "Seller". An agent can not do it him or herself without the Sellers knowledge. 


As Realtors (agents and brokers) get listings, many of those listing do not get sold and expire. This is where the "underworld" can kick in. There are those Realtors who will contact the owners of properties that had their listing expire and try to get them to relist with them.  Savvy agents will either contact a Seller right away and offer to market the owners home for a price or commission amount if they bring the owner a buyer or wait a few days to a few months and then contact an owner and pitch them the offer of bring a buyer but not asking for a listing. The reasoning behind this is that many owners/sellers get frustrated with their prior agents/brokers lack of bringing a buyer or one of several other reasons. This opens up the "hidden market" or "off market" real estate.


This then opens the question of, "are there bargains to be found in this Off Market or Hidden Market". The answer is mixed with yes and no. Sellers are not tied any one brokerage and they negotiate the terms and selling price. The other thing is that buyers have time on their side to pick up deals as sellers wait longer and longer when trying to sell their properties themselves.



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