Category Archives: Real Estate

Octo- Mom Gets New House and Other Revelant Real Estate News

March 11, 2009 jd

Large building in back is Puget Automaker's Office Building in Buenos Aires (Possibe quarters for Octo-Mom?)

Nadya Suleman’s the gal that just had eight more children, along with the six she already had, is going to have to move. Seems like the house she is living in is owned by her mom, which is being foreclosed on. The news is that the family is about $20.000 behind in their mortgage payments.

So what is she to do, well, don’t worry, her father is buying her a bigger and better house. Seems like Nadya’s father is buying her a home in La Habra, south of Los Angeles for $564,000, that’s right over half of a million dollars. The home is around 2,500 square feet and features four bedrooms, three baths and a large fenced in backyard. Well one house foreclosed, another taken off the market, have to look at the bright side of things.

Let’s see, if Nadya sleeps on the couch, and you take 14 kids and divide it by four bedrooms, that’s 3.5 kids per bedroom. If she has two more, then it would be a better fit, 4 kids per bedroom. (Don’t tell her that)

Nadya gave birth to eight children in January when she already had six.

I’m not going to go into the fact that some homeowners are thinking of letting their house foreclose or just walk away because their house is worth less than their mortgage. I hear this more and more recently. So what are you going to do if you let your house foreclose? You can’t buy another house for five years, and if history is any clue, the value of the house you left behind will be more then the mortgage you walked away from. Well, I guess I did rant a little?

Real Estate, Travel

Refinancing? Be Careful

March 10, 2009 jd

Tile mural in subway at station Plaza Italia, Buenos Aires (I'm still here)

Along with scams to help you avoid foreclosure, which I talked about in the past, there are others out there trying to take money away from home owners in distress who need to refinance because they are facing foreclosure or those whom are just refinancing to get a lower interest rate on their mortgage.

Rule number one is that you never pay in advance to have someone help you get a loan. Some banks or lenders may require that you pay upfront for an appraisal, which can run between $300 to $450 at the most. However, my experience is that you are better off using your local bank, mortgage broker or credit unions before you pay for anything, which at the most would be an appraisal. Companies outside your home area are not familiar with local real estate conditions and you may spend several weeks or months until you find out they can’t make the loan. I was surfing the net, looking for some information to bring you that might be of help if you are considering refinancing and the pitfalls that I was talking about.I happened to come across Attorney General’s website, Jerry Brown, and he has prosecuted some scam artists. These scammers were taking advantage of people trying to refinance by charging upfront fees of between $1,500 to $2,500 and doing nothing. Here is part of his press release:“In November 2008, Attorney General Brown announced the break up of the First Gov scam ring. First Gov, — which also operated under such misleading names such as Foreclosure Prevention Services; Resolution Department; Reinstatement Department; and Reinstatement Processing — solicited hundreds of homeowners, offering to help them stop the foreclosure of their homes.Ring members promised victims they would renegotiate their mortgages and reduce monthly payments. They demanded an up-front fee, ranging from $1,500 to $5,000, to participate in the loan-modification program.

Victims were told to stop making mortgage payments and communicating with their lender because this would interfere with the loan modification process. After collecting their fee, ring members pocketed the money and did nothing to help victims.”

The full text of his press release is at Office of Attorney General

By the way, talk to your mortgage company if you can, but so far they have been dumb and want you to stop making payments before they will talk to you!

Real Estate, Travel

Jon Stewart Blasts CNBC

March 9, 2009 jd 1 Comment

: Another picture of a professional dog walker. Possible new occupation for some of the people on CNBC (I’m still in Buenos Aires and I love dogs)

I love comedy. Comedy takes a complex situation and makes it so easy to understand. This was so much so with the Comedy Central’s skid by Jon Stewart taking on the high and mighty prognosticators of stock market trends on CNBC. Those advisors on CNBC are always full of advice of which stocks to buy, interviewing CEO’s of large companies and glowing about their potential outcome. Jon Stewart shows several of these interviews by them. He then shows the outcome shortly afterwards where for all of their wisdom the companies fail. I love the interview shown of Sir Allen Stanford, a billionaire at the time of the interview on CNBC. Shortly after the interview, the FBI stated that they think Sir Stanford is running a Ponzi scheme.

But the most telling part of the program was when they showed Rick Santelli ranting and raving at the Obama Administration for giving a small portion of the bailout money to homeowners facing foreclosure. Wow, what a rant. (By the way, Santelli was supposed to appear on the show, but didn’t show) But Jon Stewart puts it all in perspective when he proceeded to show that these icons of prognosticators had no problem with the present and past Administrations giving billions of bailout funds to banks, General Motors, Chrysler, AGI and other large companies.

You know it’s easy to place the blame on people facing foreclosure because they should have known what they were getting into when they took out a loan to buy a house. But who set the standards for these loans? It wasn’t the Realtors or the mortgage brokers or the homeowners. Yep, it was the banks setting the lending standards, enticing people into buying a home with low interest rates. Once people bought a home, the loan was set to trigger into a higher interest rate. Don’t you think the banks knew some people could not afford the mortgage? In the old days they called that bait and switch. Now who is getting the majority of the bailout funds, hummm, of course, the banks.

I don’t know what CNBC’s qualifications are to hire Rick Stanletlli or any of the other interviewers. Is it that they are highly educated to help people lose their money, or are they poorly trained psychics? So Rick and his cohorts are hired by CNBC to advise people of the best stocks to buy, and they are almost always 100 percent wrong, so why are they picking on people who are losing their homes? Is it because the homeowners are not as educated in financial matters as they are and should have never bought a home? (Or their stock recommendations)

Like Jon Stewart said, “If I had listened to them, I would be a millionaire, that is, if I had started out with $100 million.” Their coding is screwed up so here’s the best i could do here’s the link to the video.

Real Estate, Travel

Trip to a Museum & Bits & Pieces in Buenos Aires

March 7, 2009 jd

Friday I went to the Museo Nacional De Arte Decorativo or National Museum of Decorative Art. First an update of what’s happening here. The peso was propped up Thursday by the Central Bank and state run banks as they heavily intervened in the market to stop the peso from further weakening. The US gained two cents on the peso Friday, its highest value since 2002. When the banks offered $100 million dollars of its reserves, the peso settled at 3.622 pesos to one dollar. It’s the pesos lowest level since November of last year.

If you think that your credit card interest rate is high, how about the interest rate for commercial construction in Argentina? Argentine President Christina Ferandez complained about “the usurious interest rates” banks are charging private companies for infrastructure works. “Local banks have offered rates of up to 40 or 41 percent” she blasted. Of course Argentina is presently having a 20 percent inflation rate and real estate in Argentina is bought for cash, no low down payment and 30 year mortgage.

Back to the museum, the original structure was built by Mr. Matias Erazyriz and his wife Mrs. Josefina De Alvear. They resided in this huge palace with their two children. The palace was the hub of many major social events until Mrs. Alvear passed away in 1935. The remaining family sold the palace along with the art collection to the Argentine Government shortly thereafter.

The museum is huge, with four floors and a basement that was used for servants, boilers and garage. The museum holds over 4,000 exhibits, some dating back to the 15^th century. It is well worth going to this museum if you happen to be in Buenos Aires. Just the workmanship of the building itself is worth the trip. The museum is located at Av. Del Libertador 1902 in Buenos Aires. Their website is Nacional De Arte Decorativo

So I called the bank again, after paying to rent a computer to get all the information the previous agent wanted. I gave a new agent my card number, social security number and said, now do you want my mother’s name, my address and she cut me off and said “Oh, no you’ve given me enough information.” (Grrr!) She got off the phone for a few minutes, came back and said they were upgrading my card, which was the problem, they were taking care of the problem now and I should be able to use my card in a few hours. So today, I was able to use my card, its fun dealing with a bank, NOT!

Professional Dog Walkers, There are many of Them in Buenos Aires

Prior to traveling abroad, I advised my bank that I was traveling to Buenos Aires. What a surprise when I went to draw out some money and my card was rejected! Calling the international toll free number listed on the back of my card, (which does not work here in Buenos Aires), I was asked for my card number, my social security number, my address, my mother’s name, and then what was the last deposit or what was the last expenditure or my account number. After 10 minutes, having none of that information, I gave up, went on line and got all the information that the agent for the bank requested.

Real Estate, Travel

Worried, Recession? The US is Still the Best

March 5, 2009 jd

There was a very interesting article in the Buenos Aires Herald today by James Neilson. The Herald is a news publication printed in English and you can usually get one at the numerous newspaper stands on the streets of Buenos Aires.

Mr. Neilson points out that we are in a better position to pull out of this recession quicker and healthier then Europe, Japan, China or Africa. If you notice, our dollar continues to gain strength against the Euro, the Yen and almost all other currencies of the world.

In his article, Mr. Neilson states in part:

“But bad as the situation in the US undoubtedly is, elsewhere it is even worse. That is one reason why in these troubled times jittery investors want to get their hands on dollars. Another is that, no matter what happens in the next year or so, the medium-term prospects facing the US are far more promising than those of Europe, China or Japan, to name just three possible alternatives. This being the case, it is somewhat premature to speak of the imminent end of US economic hegemony and its replacement by a more equitable arrangement involving at least half a dozen other countries. “

Mr. Neilson goes on to explain the problems that Europe, Japan, Russia, China, Africa and South America are facing. Problems that is severe with no easy or probable solutions for them.

For example, Mr. Neilson says about China and summary:

“China’s outlook is only marginally less alarming than that of Europe and Japan. Thanks to the one-child policy, before too long there will be a huge number of single men who will be expected to support their aging parents. Many will not take kindly to the idea. Though China is bursting with talented people who, unlike so many of their North American and European contemporaries, are willing to study and work as diligently as any Victorian, before that immense human capital can be properly tapped China’s rulers must find a way of maintaining social discipline during slumps like the current one. That will not be easy. Before everything went haywire, Chinese officials insisted that their country’s economy would have to grow by at least 8 percent a year simply to provide enough work to satisfy the millions who were leaving the poverty-stricken countryside. China’s GNP may still be increasing, but at an annual rate that by all accounts is far lower than 8 percent.

As a result, if the recession, or depression, lasts as long as pessimists fear, the US will in all probability emerge in far better shape than any of its hypothetical rivals. With this in mind, it is quite natural for Asian, European and Latin American investors to put their money on the US dollar rather than on the Euro — which may not survive the mayhem — the battered pound sterling, the Swiss franc, the yen, the yuan or even the peso. The US may be groggy and could soon hit the canvas, but it would be less likely to remain there for longer than the other big countries that would go down with it.”

Real Estate, Travel

Argentina Real Estate

March 4, 2009 jd 2 Comments

First a little update as to what’s happening in Argentina. It’s raining here now which is a relief because just like us in California they are having a drought. My understanding is that it has been so dry that they have lost over 800,000 head of cattle. The government, along with the drought is putting Argentina once the third leading exporter of beef in the world to seventh in the world. (BBC News) Since Judy and I were down here in November of 2008, the peso has depreciated from 3.40 pesos to 1 dollar, to the present time of 3.70 pesos to the dollar.

Everyone I talked to down here blame the recession on America’s and Europe’s ability to borrow money to buy houses with a low down payment and to have a thirty year mortgage. They say that cannot happen in Argentina because there, everyone pays cash for their homes. Paying cash for their homes assures them that they will not lose their homes to foreclosure. They said if we had paid cash for our homes, we would not be in this real estate melt down.

In Argentina there is only one way to buy a residence and that is strictly cash. You offer fifty percent down and on closing you put up the other fifty percent. There are no title companies there; you rely on a notary to assure you that you are getting a clear title to the property that you are buying. He or she is insured and they charge two percent of the purchase price for their service.

For them, it limits their market tremendously, only those that can afford to raise cash in the amount of $90,000 to $500,000 can afford to buy a home. (About the going rate in Buenos Aires for apartment condominiums)

It is hard for the Argentineans to see the advantages of being able to borrow money to buy real estate, since all they read about and see is the news about foreclosures, here in the United States and abroad. They are not aware of the greed of the banks and their CEO’s that led to this present crisis. Their qualifications for a loan were simple, they put a mirror in front of a person’s nose and if they detected that the person was breathing, the loan was approved.

Of course paying cash also limits your market, since so few here in Argentina (And the United States) can afford to raise that kind of cash. Even now, in the United States, our ablity to borrow money is what will pull us out of the housing crisis. First time home buyers, real estate investors, almost all of them rely on borrowed money. So we still have in my opinion, the best system in the world. Borrowed money has made a lot of people wealthy and provided homes for the majority of people in the United States. In contrast, the real estate market is flat in Argentina, since no one is spending money and the majority of the people do not have the resources’ to buy a home.

Nevada County Home & Land Statistics, Real Estate

Nevada County Residential Sales January-February 2008 vs. 2009

February 28, 2009 jd

And the real estate market is going to go?

Residential sales for the period January 1, 2009 to February 28, 2009 compared to the same period last year remained about the same. Eighty homes were sold this year compared to eighty six homes last year. However, average sales prices dropped 12% or about $48,500 per home. The average sale price this two month period was $340,866 compared to the same period last year’s average of $389,350.

Days on the market increased to 158 days compared to 128 days on the market for last year or about 19 percent longer on the marked before they sold.

That’s the long and short of it, but I did an analysis of the entire year of 2008. Sales figures for residential home prices in Nevada County indicate a 12% decline in value. Prices of residential homes in Nevada County are still higher than our surrounding neighbors and higher than the State average of $281,100 versus our average of $340,866.

A report from the California Association of Realtors states that “The median price of an existing, single-family detached home in California during December 2008 was $281,100, a 41.5 percent decrease from the revised $480,820 median for December 2007, C.A.R. reported. The December 2008 median price fell 2 percent compared with November’s revised $286,850 median price.

“Median prices continued to decline in December, and based on preliminary calculations, the statewide annual median price declined 38 percent for all of 2008 compared with 2007,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “While the month-to-month decrease in December was considerably smaller than in recent months, it remains too early to determine if prices are beginning to stabilize. Many distressed sales still must work their way through the system.”

Real Estate

China Buying American Real Estate

February 27, 2009 jd 2 Comments

China may be having the same economic troubles that the United States is having, but groups of Chinese are coming here to buy up some bargains. A trip organized by SouFun Holdings, China’s leading property website company announced a tour to America to buy real estate. The trip was heavily oversubscribed and only 40 will make the tour to buy property in the $300,000 to $800,000 range.

According to the Timesonline: “Mo Tianquan, the chairman of Soufun.com, told The Times that his clients were hardly run-of-the-mill Chinese in a country where GDP per head is about $4,000 a year. “These people are not ordinary members of the masses,” Mr Mo said.He said: “I don’t know how much money these people have. I would say they must have at least a million dollars in cash. That’s cash they can spend any time – not investments fixed already in real estate or shares.”

Mr. Tianquan estimated that at least a third of the group were buying for their children studying in the United States. They are interested in both houses and flats, “properties near universities or high schools and bankrupt homes auctioned by the courts. Usually these houses are only half the price they used to be”

“He said: “I don’t know how much money these people have. I would say they must have at least a million dollars in cash. That’s cash they can spend any time – not investments fixed already in real estate or shares.”

One question is why the Chinese would want to buy in the United States when the yuan is seen as likely to rise further in the long term, thus effectively harming the value of their American property.

Mr Mo said that this was a minor consideration for these members of China’s tiny elite. “They don’t care if the dollar will rise or not,” he said. “They are using pocket money to buy houses. To spend these sums has no impact on their way of life. If it makes a profit, and how much, is not a consideration.”

There is one final hurdle: it is not clear how even the super-rich will get their assets out of China, which limits the amount a Chinese person can take out each year to $50,000.”

Its bargain time in the United State again. Some of you may remember the down turn we had in real estate in the 1980’s The Japanese came over here and bought a huge amount of real estate..They poured nearly $300 billion into high-profile properties like Rockefeller Center in New York and the Pebble Beach Golf Club in California. Do you have a feeling that history is repeating itself? I remember the doom and gloom of those days, everyone thought it was the end of the real estate market. We’ve had several booms and busts in the real estate market since then. The real estate market, like the stock market, will always have it’s up and downs.

Real Estate

Now is the Time to Buy Real Estate

February 26, 2009 jd 2 Comments

According to Forbes Warren Buffett is number two in the line up of the 400 richest Americans. If you believe in his wisdom, Mr. Buffett says now is the time to buy! (Mr. Buffett is worth 61 billion dollars)

I’ve read his simple rule for buying of stocks, companies and real estate, “Be fearful when others are greedy, and be greedy when others are fearful.”

He admits that fear now is widespread, gripping even seasoned investors. And that fear makes us sell stocks and hold on to cash, or hold off buying anything.

Then he observed, “In waiting for the comfort of good news, they are ignoring the great hockey player, Wayne Gretzky’s advice: ‘I skate to where the puck is going to be, not to where it has been.'”

Continuing with some other comments by Mr. Buffett, this is part of the text of an opinion piece written by Warren Buffett and published in the New York Times on Friday, October 17, 2008.

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts”

So while everyone is selling, Warren Buffett is buying. So where are you, are you sitting on your cash, waiting for the market to settle down? Remember the greed of some investors when the market was soaring, they were buying real estate for whatever price the seller was asking. They were buying on the greed side of real estate and many lost their total investment. So who is buying during this fear cycle? Read my previous blog , For Some, Foreclosed Homes Equals Gold.

So if you have the money to invest, now is the time to buy, according to Warren Buffett.

Real Estate

Hard Money Loans and Some Pitfalls

February 25, 2009 jd

money
First a brief definition of what a hard money loan is from Wikpedia:

Many hard money mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Typically, the maximum loan to value ratio is 65-70%. That is, if the property is worth $100,000, the lender would advance $65,000-70,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.

By now we have all heard about Thomas Hastert, 53, who now faces 73 counts of embezzlement, securities fraud, conspiracy and filing false documents . He is alleged to have misused funds taken from private investors that were supposed to be invested in real estate properties or construction of new homes.

I don’t know all of the various schemes that he is supposed to have perpetrated, but I am familiar with at least one. I was approached by a mortgage broker and asked if I knew any good hard money lenders because her friend had started building a home with a loan from Thomas Haskert . As the conversation continued, it was explained to me that Haskert had made the loan with insufficient money in her friends construction account.

I am not a lawyer, but I believe this is a felony. Prior to allowing the homeowner to sign papers for the construction loan, the loan must be fully funded by the hard money lender, the money must be placed in a trust fund independent of the lender after the papers are signed and a third party must inspect the construction phases prior to releasing any money. This protects both the investors and the borrower.

What Haskert apparently did was to have the borrower sign papers prior to having the loan fully funded, putting his investors and borrower at great risk. For example, if you borrow $500,000 to build a home, then during the course of construction you incur costs of $150,000 in materials and subcontractors bills. At that point you are ready for a draw of $150,000. However, if Haskert has not fully funded the loan and there is insufficient funds to give you $150,000, you are in a lot trouble.

Now your property is subject to construction liens, you have a note against your property for $500,000 (the money you borrowed that is not there) and you are going to have some real problems getting out of this mess.

So remember, if you do borrow from a hard money lender for a construction loan, be sure all of the money is there, be sure that the money is put in a trust fund and that someone comes out and inspects your progress. If you invest your money with a hard money lender, check out how long they have been in business, which may or not mean anything (think Bernard Madoff), look at the property you are going to invest in, and determine that you have a safe loan to value ratio.