Real Estate Investments

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  1. Cycles are part of any market of the economy.
  2. What is next? House scarcity and expensive rentals.
  3. Uneven recovery: Major Hubs recovered faster than rural areas and suburbs
  4. Residential has improved. Commercial by segments.

The End of the Down Market: 06/17/2013

  1. Cycles are part of any market of the economy.
  2. What is next? House scarcity and expensive rentals.
  3. Uneven recovery: Major Hubs recovered faster than rural areas and suburbs
  4. Residential has improved. Commercial by segments.

The Real Estate Expert answers the following questions:

1. Why aren’t they accepting my offer if I am sending full price?

2. What do you mean by “Multiple Offers” and “Highest and Best”?

3. Why the properties that I finding in or are gone when I try to schedule appointments?

4. Are they lying about the rentals in Craiglist? Bait and Switch scam

5. Is this a good time to buy? Procastination nation.

Looking to buy, sell or rent? Contact the Real Estate Expert to


Real Estate Update 04/20/2013

The Real Estate Expert answers the following questions:

1. Why aren’t they accepting my offer if I am sending full price?

2. What do you mean by “Multiple Offers” and “Highest and Best”?

3. Why the properties that I finding in or are gone when I try to schedule appointments?

4. Are they lying about the rentals in Craiglist? Bait and Switch scam

5. Is this a good time to buy? Procastination nation.

Looking to buy, sell or rent? Contact the Real Estate Expert to


What’s Behind Falling Housing Inventories?

Home sales in December dropped by 1% from November, the National Association of Realtors reported on Tuesday, but still stood nearly 13% above the levels of one year ago. That means home sales have risen from the year-ago month for 18 straight months.

For 2012 as a whole, sales were up 9% to 4.65 million units, the highest annual total since 2007.

Prices, meanwhile, are picking up because the number of homes for sale continues to drop despite the sales volume gains. The number of homes for sale fell to 1.82 million at the end of 2012, an 8.5% drop from November and a 21.6% decline from one year earlier, the Realtors’ group said on Tuesday.

Here’s a breakdown of why inventory has continued to drop this year:

Many homeowners are underwater: More than 10 million homeowners owe more on their mortgage than their homes are worth, according to CoreLogic Inc. CLGX -1.83% That pencils out to around 22% of homeowners with a mortgage, or 15% of all homeowners (since not every homeowner has a mortgage). Underwater owners aren’t likely to sell unless they need to move due to changing life (marriage, divorce) or financial circumstances, and they’ll take a hit on their credit for pursuing a short sale, where the bank allows the home to sell for less than the amount owed.Data from CoreLogic show that inventory has been the most constrained in housing markets where there’s the largest concentration of underwater borrowers.

Others don’t have enough equity to “trade up”: Another 10 million homeowners have less than 20% equity in their current residence, meaning they can’t easily “trade up” to their next house. Traditionally, homeowners have relied on home equity to make the down payment on their next home, and to pay their real-estate agent to sell their current home and buy their next one. These “under-equitied” homeowners—meaning they don’t have enough equity to make a move to a more expensive home—have added to the drag on inventory.

Everyone wants to buy at the bottom, but few want to sell: Even those people who do have plenty of home equity are likely reluctant to sell if they think prices will be higher tomorrow. Would you sell your largest asset today if you thought it might be worth 5% more next year? This helps explain why markets such as Denver and Dallas, which didn’t have huge housing bubbles and thus had smaller shares of underwater borrowers, have also seen double-digit inventory declines.

More purchases from investors of all stripes: From the big institutional investors that have been grabbing all the headlines, to the mom-and-pop landlords that have traditionally played a much larger role renting out homes, investors have increasingly bought homes that can be rented out rather than flipped and resold for quick profits. This is further keeping inventory off the market in two ways: homes that are bought at courthouse foreclosure auctions never show up on multiple-listing services when they’re initially sold. They’re also held out of the for-sale pool because they’re being rented out.

Banks have been slower at foreclosing: Banks and other companies that process delinquent mortgages have had trouble proving that they’ve followed state law in taking title to homes ever since the “robo-signing” scandal surfaced in late 2010, and they’ve also had to meet a host of new state and federal rules governing loan modifications and foreclosures from settlements spawned by the robo-scandal. Banks have also become better about approving short sales and loan modifications, which has curbed the flow of foreclosed properties onto the market.

Builders have been putting up fewer homes: Housing starts were severely depressed from 2009 through 2011 and have only recently rebounded off of those low levels. Consequently, there’s been much less new home inventory being added to the market at a time when demand (boosted by increases in household formation) is picking up. If more homes are held off the market—for any of the five reasons above—you can bet that builders will move in to fill the void.

Many of these factors that have been dragging down inventory aren’t signs of “normal” or “healthy” housing markets—but then, we probably haven’t had a normal market for around a decade now. If anything, declining inventory shows that normal supply-and-demand dynamics are returning, which is an important step towards putting a floor under home prices and giving markets time to get back to health.

Source: “Six Reasons Housing Inventory Keeps Declining,” The Wall Street Journal (Jan. 22, 2013)

Low housing inventories may push rental demand for years

The next 10 years may bring five to six million new renter households. Or at least that’s what a recent infographic by the Bipartisan Policy Center is saying. So in the midst of a recovering housing market, why the shift toward a rise in rentals?

Although housing starts are up, construction will take some time to complete and the low inventory of houses may push many potential homeowners to consider renting.

“There is clearly an unmet demand for homeownership among young households,” Barry Zigas, director of Housing Policy for Consumer Federation of America, told HousingWire. “Those households are running up against a number of constraints.”

Factors such as tighter credit, larger down payments and decreased income with the rising generation will all play into the increase in renters in the years ahead.

“Credit for homeownership borrowing will likely be tighter and potentially more expensive, relative to earlier times,” Zigas said. “Families will likely have less wealth because the rising generation is starting with less wealth. If down payments are at any significant level, it will be a barrier to acquiring a home for longer than may have been the case in the past.”

There are several key groups that will be the driving force behind the rental demand, according to the below infographic. The growing number of seniors looking to downsize their homes, the young adults moving out on their own yet not ready for homeownership, the post-foreclosure homeowners and the growing number of immigrants in the U.S. will all play a significant role in the rising rental remand.

“We expect to see an increase in household formation and for a variety of reasons that household formation is likely to be more heavily concentrated among renters and households who are likely to be renters for somewhat longer than was the case for the last 20 years,” Zigas said.

Source: “Small Housing Inventory May Push Rental Demand for Years,” HousingWire (Dec. 31, 2012)

Por que comprar una propiedad en Miami y en el sur de la Florida en general?

Por que comprar una propiedad en la Miami y en la Florida en general:

1. Es una inversion que la puedes usar para ti y tu familia.
2. Todavia hay muy buenas oportunidades.
3. El sur de la Florida es muy atractivo con sus playas, clima, restaurantes y vida nocturna.
4. Comprando una propiedad a los buenos precios de ahora puede uno asegurar un lugar para retirarse mas adelante.

Nuestra empresa tiene oficinas en Chicago y Miami. Dejeme saber sus comentarios y preguntas.

Have you committed one of the seven deadly sins?

Written by: Brandon Turner, Bigger Pockets

No, I’m not referring to gluttony, wrath, or sloth. I’m talking about the Seven Deadly Sins of Real Estate Investing.

Ok, maybe they aren’t physically deadly – but they are possibly catastrophic to your business.
If you are concerned about the health of your investments, make sure to steer clear from these seven sins:

1. Buying Based On Future Value
Also known as “pro forma” numbers, many investors buy property based on what it “could” be worth, not what it is worth. Real estate agents are especially known for emphasizing the future possible value (they are the eternal optimists) but neglecting the facts on the ground. Make sure you don’t fall victim to this sin and always know exactly what the current value is and don’t buy anything for what could be.

2. Blindly Following A Guru
Real estate investing is not a system. Anytime I see that phrase I cringe just a little bit. The typical real estate guru would have you believe that by simply following a step-by-step system you can make millions in real estate. Millions can be made, but its not by following a system – it’s from following your brain. Investing is about solving problems, and if your “system” is unable to account for flexibility or challenges – your dead in the water.

3. Being Unrealistic With the Math
The one deadly sin nearly every investor has made is not being realistic with the math. Whether overestimating future value, underestimating the repair costs on a project, or simply not taking the time to actually do the numbers- poor math will destroy an investment.

4. Relaxing on the Record Keeping
For many investors, “record keeping” is nothing more than an attic full of vintage Barry Manilow albums (get it? “record keeping”… no? Okay, easy – I’m an investor, not a stand up comedian!) If you don’t know the health of your investments – how can you make informed decisions for the future of your investments? By keeping adequate records and staying up-to-date with your finances, you position yourself to know exactly how well your investments are performing while also ensuring the long-term stability of your investment plan. Additionally, keeping good records makes tax time a breeze as well as simplifying the process when applying for a loan. For more information on record keeping for investors, check out Arthur’s post on record keeping.

5. Confusing Investing with Gambling
Do you invest or do you gamble? Do you even know the difference? Buying something with the hopes that it may someday bring a profit is gambling (or speculating). Flipping, building spec homes, and investing in raw land often resemble gambling much closer than investing. Notice I didn’t say that gambling was one of the Seven Deadly Sins of Real Estate Investing. The sin is not in gambling, but in confusing the two. Each strategy requires a different skill set and different financial resources. Be sure of what you are trying to accomplish and make sure you have the tools necessary.

6. Over Leveraging Yourself
Perhaps the most common real estate sin over the first decade of this century, over leveraging is the act of carrying too much debt than what the properties can maintain. If you are financing everything to the point that there is no cashflow, it is very difficult to weather the storms when they rise up. Just ask the thousands of bankrupt investors who learned this lesson the hard way.

7. Getting Bored and Getting Fancy
The path to wealth through real estate investing is not difficult, but it also isn’t super fast. In an earlier post on BiggerPockets, I mentioned how real estate investing was like playing a game of Super Mario Bros. The game is fairly simple and straightforward, thus easy to master. The difficulty, however, is that once the system has been mastered it is easy to get bored and decide to get fancy. Many investors know that wealth and retirement can be created using real estate, but get bored and try to hurry the process up by speculating and buying deals that don’t fit their plan. This is a sure-fire way to lose most or all of one’s wealth. Remember, it can take years to build up a solid retirement portfolio but only one stupid mistake to lose it all.

Chicago-area home prices soar in June


The S&P/Case-Shiller index of Chicago-area single-family home prices rose 4.6 percent from May to June, according to a report released this morning. The index jumped 4.5 percent the previous month, but it is still 1.7 percent below year-earlier levels.

A 20-city composite price index increased 2.3 percent from May to June and was up 0.5 percent on a year-over-year basis, according to the report.

“We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change,” David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement. “The market may have finally turned around.”

In June, prices rose for the second consecutive month in all 20 metro areas the indices track. Chicago posted the third-biggest monthly gain, after Detroit, where prices rose 6 percent, and Minneapolis, 4.8 percent.

“We are aware that we are in the middle of a seasonal buying period, but the combined positive news coming from both monthly and annual rates of change in home prices bode well for the housing market,” Mr. Blitzer said.

On a seasonally adjusted basis, the Chicago-area price index rose 1.7 percent from May to June, vs. a 0.9 percent gain for the 20-city index.

Chicago-area prices still are down about 33 percent from their peak in September 2006, according to Case-Shiller data.

An S&P/Case-Shiller index of Chicago-area condominium prices rose 4.2 percent from May to June. But the index was down 5.1 percent from a year earlier and nearly 34 percent from its peak in September 2007.

Mortgage closing costs fell 7% for homebuyers

By Les Christie @CNNMoney August 7, 2012: 11:53 AM ET

NEW YORK (CNNMoney) — Federal regulations are helping to significantly reduce the amount new homebuyers are paying come closing time.

The average cost of closing on a mortgage has fallen by 7.4% over the past year, according to a recent survey by At the end of June, a homebuyer looking to close on a $200,000 mortgage with 20% down paid an average of $3,754, $300 less than 12 months earlier.

Included in those costs are origination expenses, such as application fees and the cost of doing credit checks, and third-party fees, such as those paid for title searches and insurance.

The decline can be attributed to new regulations that require lenders to be more accurate when estimating closing costs for borrowers, said Greg McBride, Bankrate’s senior financial analyst.

The regulation, which was put in place two years ago as part of the Real Estate Settlement Practices Act requires lenders to provide a “good faith estimate” of third-party fees that is within 10% of the actual amount the buyer will pay.

“The big drop in third-party fees indicates the lenders are doing a better job at estimating what the costs will be,” said McBride.

The most expensive state for closing on a home was New York, where total origination fees and closing costs averaged more than $5,400 for a $200,000 mortgage, according to Bankrate. Texas, Pennsylvania and Florida also cost far more than the national average.

Missouri was the cheapest, with total borrowing costs averaging just over $3,000. Other states where closing costs remain low include Kansas, Colorado and Iowa, Bankrate said.

Even on a neighborhood level closing costs can vary significantly, said McBride. Borrowers can save money by getting at least three estimates and paying close attention to the total costs of obtaining a loan rather than getting seduced by low advertised interest rates.

“Borrowers don’t want to get tunnel vision shopping for the best mortgage deal by only looking at the interest rate,” he said. “Closing costs are a big line item and savings there can be quite significant.”
Find homes for sale

First Published: August 6, 2012: 4:16 PM ET. Taken from CNNMoney.

Metro Area Home Prices Rise

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Median existing single-family home prices are rising in more metropolitan areas, but a lack of inventory — notably in lower price ranges — is limiting buyer choices in an increasing number of markets around the country, according to the latest quarterly report by the National Association of REALTORS® (NAR).

The median existing single-family home price rose in 110 out of 147 metropolitan statistical areas (MSAs) based on closings in the second quarter in comparison with same quarter in 2011; three areas were unchanged and 34 had price declines. In the first quarter of 2012 there were 74 areas showing price gains from a year earlier, while in the second quarter of 2011 only 41 metros were up.

Positive Signs
A separate breakout of income requirements to buy a home on a metro basis shows a wide range of conditions, but most buyers had ample income in the second quarter assuming they could meet mortgage credit standards.

Lawrence Yun, NAR chief economist, said home prices are set to rise in even more markets during upcoming quarters. “It’s most encouraging to see a growing number of metro areas with rising median prices, which is improving the equity position of existing homeowners. Inventory has been trending down and home builders are still under-producing in relation to growing demand,” he said. “Some of the improvement in prices is due to a smaller share of sales in low price ranges where inventory is tight.”

The national median existing single-family home price was $181,500 in the second quarter, up 7.3 percent from $169,100 in the second quarter of 2011. This is the strongest year-over-year increase since the first quarter of 2006 when the median price rose 9.4 percent, but even with the gain the current price is 20.1 percent below the record set in 2006.

The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed higher by a relatively small share of upper-end transactions.

Distressed homes — foreclosures and short sales which sold at deep discounts — accounted for 26 percent of second quarter sales, down from 33 percent a year ago.

Total existing-home sales, including single-family and condo, slipped 0.7 percent to a seasonally adjusted annual rate of 4.54 million in the second quarter from 4.57 million in the first quarter, but were 8.6 percent above the 4.18 million pace during the second quarter of 2011.

At the end of the second quarter there were 2.39 million existing homes available for sale, which is 24.4 percent below the close of the second quarter of 2011 when there were 3.16 million homes on the market. There has been a steady downtrend since inventories set a record of 4.04 million in the summer of 2007.

According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged a record low 3.80 percent in the second quarter, down from 3.92 percent in the first quarter and 4.66 percent in the second quarter of 2011.

A Look at Buyers
NAR President Moe Veissi said buying power is historically high. “Home buyers today can stay well within their means. Record low mortgage interest rates and an over-correction in home prices have opened the door to many potential buyers,” he said.

“What we need now is additional inventory in the lower price ranges, so we hope banks will be releasing more foreclosure inventory into the market. With gains apparent in all of the price measures, banks also should have more confidence in expanding mortgage credit to home buyers using safe but sensible standards,” Veissi said.

A breakout of incomes needed to purchase a median-priced existing single-family home by metro area shows the typical buyer has ample income. Required income amounts are determined using several downpayment percentages, assuming a mortgage interest rate of 4 percent and 25 percent of gross income devoted to mortgage principal and interest.

The national median family income was $61,000 in the second quarter. However, to purchase a home at the national median price, a buyer making a 5 percent down payment would only need an income of $39,900. With a 10 percent down payment the required income is $37,800, while with 20 percent down the necessary income is $33,600.

“Because the income required to buy to a typical home is very manageable by historical standards, any further decline in mortgage interest rates will have little effect. Changes in underwriting guidelines would have a far greater impact,” Yun said.

In the condo sector, metro area condominium and cooperative prices — covering changes in 53 metro areas — showed the national median existing-condo price was $178,000 in the second quarter, up 7.5 percent from the second quarter of 2011. Twenty-nine metros showed increases in their median condo price from a year ago and 24 areas had declines.

First-time buyers purchased 34 percent of all homes in the second quarter, compared with 33 percent in the first quarter and 35 percent in the second quarter of 2011. Historically they are close to 40 percent of the market.

The share of all-cash home purchases was 29 percent in the second quarter, down from 32 percent in the first quarter; it was 30 percent in the second quarter of 2011. Investors, who make up the bulk of cash purchasers and compete with first-time buyers, accounted for 19 percent of all transactions in the second quarter, down from 22 percent in the first quarter; they were 19 percent a year ago.

Around the Country
Regionally, existing-home sales in the Northeast slipped 0.6 percent in the second quarter but are 10.6 percent above the second quarter of 2011. The median existing single-family home price in the Northeast declined 1.6 percent to $241,300 in the second quarter from a year ago.

In the Midwest, existing-home sales rose 1.3 percent in the second quarter and are 16.2 percent higher than a year ago. The median existing single-family home price in the Midwest rose 7.5 percent to $149,400 in the second quarter from the same quarter in 2011.

Existing-home sales in the South increased 1.3 percent in the second quarter and are 7.7 percent above the second quarter of 2011. The regional median existing single-family home price increased 7.4 percent to $163,200 in the second quarter from a year earlier.

With tight inventory, existing-home sales in the West fell 5.3 percent in the second quarter but are 3.0 percent higher than a year ago. The median existing single-family home price in the West jumped 13.4 percent to $234,000 in the second quarter from the second quarter of 2011. “Inventory is pretty tight in all prices ranges in most of the West except for the upper end, which accounts for the sharp price gain,” Yun noted.

Source: NAR

Integrity and Trust

“Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.”
― Warren Buffett

I got recently disappointed by a business partner. I guess like everything else in life happens. Like the betrayal of a teenager girlfriend hurts but there is a bright side: I learnt to appreciate the loyal people that surrounds me. The most important thing in business (and in life) is Trust and this deals directly with Integrity. That determines long term business relations and certainly determine the best human relations.

Have a good night my dear reader!

– German Llanos