The DC Investor

NAR's Stimulus Proposal

2008-10-22T14:24:00.003-04:00

Article from Mortgage News Daily

The National Association of Realtors® (NAR) stayed right on message as it proposed a four-point plan for Congress to enact to resuscitate the housing market and including yet another plea to keep banks out of the real estate business.

The plan, revealed in a statement made late last week and in the NAR President's Podcast released on October 21, calls for a special "lame-duck" session of Congress and asks that it consider the following, what it calls "consumer-driven" provisions to boost the economy and soothe the nerves of jittery homebuyers.

1. Eliminate the provision contained in last summer's housing rescue bill that requires first-time homebuyers to repay the $7,500 tax credit they receive under the plan and expand that credit to apply to all buyers of a primary residence.

2. Urge the government to use a portion of the allotted $700 billion that was provided to purchase mortgage-backed securities from banks to provide price stabilization for housing. The Treasury department should be required to:

3. Extend credit down to Main Street, making credit more available to consumers and small businesses; Expedite the process for short sales;
Expedite the resolution of banks' real estate owned (REOs) properties.

4. Make permanent the prohibition against banks entering real estate brokerage and management, further protecting consumers and the economy.

In the podcast NAR President Richard F. Gaylord called the proposal "a boldstep on the policy front," and urged NAR members to talk with members of Congress while they are home in their districts over the election hiatus about the proposal and how important its provisions are to consumers.

In the earlier statement Gaylor said, "Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible." It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans. We are asking Congress to act right away."

Gaylord said NAR, as the leading advocate for homeownership and private property rights, believes it is important for Congress to address the concerns and fears of America's families, much in the way it has addressed Wall Street turbulence. "Housing is and has always been a good, long-term investment and a family's primary step towards accumulating wealth."

Gaylord said that NAR will strongly pursue those proposals and is calling on Congress to return to enact housing stimulus legislation in a lame-duck session after the national elections in November.

NAR's Four Point Plan

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

Your Agent.... A Member of Your Real Estate Investment Team!!

2008-10-13T14:58:00.005-04:00

This is for the investors out there!

Please choose your Realtor carefully. This role is an extremely important aspect of your real estate team. The Realtor, among other things, understands the details of your target market. They posses the knowledge and expertise, not to mention the time, to implement a marketing campaign on your behalf. Because this is a service that the Realtor provides, that expense doesn’t come out of the investor’s bottom line.

But what led me to warn… no… to emphatically beseech investors out there is that this current market has an ever increasing rate of uncertainty. For the past couple of months, the level of risk has been rising daily. And as an investor, if you have inventory that needs to be liquidated in order to weather this market, it is important that it’s executed quickly. Everyday your property sits is either capital leaving your pocket or opportunities missed to proceed with other projects.

Case in point, I have looked at a couple of commercial properties that have the potential to be great investments. So I did my analysis of the property and the area to get a value. My analysis clearly shows that the asking price is egregiously overpriced. So I’ve spoken to the owner’s agent to get an understanding of how they arrived at the asking price. The agent told me that the value of his property was based on other properties in the area with the same number of units that had contracts on them. But he did not mention anything about the income those properties produced or market cap rates in the area or any other pertinent information used to get their value. From speaking to the agent I understand that he is more knowledgeable of residential properties than commercial properties. So if an offer was made, it would be like comparing apples to oranges for the agent. Unfortunately, the agent wouldn’t understand how to arrive at a fair market value.

So investors, make sure you have, as part of your team, a Realtor that understands your needs as an investor.

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

The 3 Don'ts of a Landlord

2008-10-07T16:12:00.007-04:00

It’s not an easy business being a landlord. All you see is the good life on the informercials. You see people sitting on beaches or on vacation in Las Vegas. But there are so many things you don’t see during those get rich quick marketing campaigns.

It is important that an investor in rental properties understand the ins and outs of the leasing business. I must say that since I’ve been a landlord, I’ve learned so much in a short amount of time. Most of the things learned were learned the hard way, trial and error or just by touching the hot stove! Well let me impart on you the top three things that are now engrained in my psyche!

1) DON’T overpay for a rental property!

It’s extremely important to know a property’s value. Duh! This may seem like an extremely basic point. But I don’t know how many people fall short of this fundamental principle. I recently did an analysis of apartment buildings that were purchased in Washington DC and I don’t know how many buildings were purchased at amounts way above their value. Before I started investing, I read a lot of books and every book stressed the importance of not overpaying for a property. An investor can not, I repeat… CAN NOT be led by emotions. If the property has the best location and no rent ceiling, do not pay a penny more than what the property is worth. And guess what… I have fallen in that trap before. More than once to my shame! Overpaying!! Putting my emotions into my analysis and justifying why I should make the purchase by how I feel. If you can’t be objective in your analysis then find some one who has a good understanding of financial analysis and have them run your numbers. That way you will have someone who has no interest in the property and can tell you if it is a good deal or not. Remember… asking price is different from purchase price.

2) DON’T underestimate the importance of routine maintenance!

Expenses eat away your profits. Normally when your expenses run high, it’s likely due to something that could have easily been remedied. Schedule periodic inspections with your tenants. It’s always better to catch problems either before they arise or while they are still minor. Also have your tenants understand that they need to bring to your attention anything that needs repair. I’m not talking about getting a new refrigerator every Christmas! Items such as leaky faucets, running toilets, cracked windows. After all this is your property and it is the most important asset in your rental business. If you are like me and don’t know a hammer from a wrench then solicit the services of a handy man. I think handy men are the unsung heroes to most businesses!

3) DON’T run low on reserves!

This, I believe, is why most landlord’s end up selling their properties. Reserves, Reserves, Reserves! One day a tenant will move out of your unit. Or worse, you will run into a wolf in tenant’s clothing. You know the one, the non paying tenant. If you don’t have the reserves to cover periods were rent revenue doesn’t cover debt service and expenses then your business will ultimately fail. Make sure you are saving some of the rental income each month to cover shortfalls. I know you may have the urge to put some of that income towards a new car. Or to take some of the revenue and go on a vacation. Believe me, there will be time for that. But the time is after you’ve built enough capital to cover the undexpected. Remember this is a business! If you keep that in mind then you will treat your units as such!

If you keep these three basic lessons in mind then you will have the foundations of a successful rental business!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

KISS... 'Keep It Simple Stupid!"

2008-10-03T10:20:00.005-04:00

Lately, I’ve been reading article after article about the rise of foreclosures, the effects of foreclosures and that the root cause for the need of this bailout plan, currently in Congress, is the current housing crisis. And no one seems to know what to do! Now I’m no economist, so I see the solution as a simple one. I went to a military college where I was taught the adage of “KISS”… Keep It Simple Stupid or rather it was frequently yelled at me.

But to me the solution would be to modify the terms of these bad loans. Ok… you may say that these people should not have gotten into these loans knowing they couldn’t afford them. So why give them relief. Then I would tell you that these lenders should not have made unscrupulous loans without verifying the info they received from the borrower. For the life of me I don’t understand, from a lender’s perspective, the justification for the underwriting department using stated income documents. As a lender, if one of your main procedures is to mitigate risk by determining the creditworthiness of a borrower, why wouldn’t you take more caution by at least verifying what the borrowers puts on the documents?

Then you might say… “Well interest rates were at historical lows causing banks to practically give money away.” Well everyone does share the blame for this crisis. But I think to avoid taxpayers footing the bill, just modify these loans. The banks will become liquid again which in turn will ease the credit crunch. These mortgage backed assets will take a slight decline in value, but when the mortgages are adjusted and homeowners start making payments again, these assets, at the least, will have a determinable market value. A value that, I believe, will appreciate at a faster rate than the current solutions. And the final result will be a restoration of confidence in the American economy.

And in the end, I won’t have to read so many articles about foreclosures!

As always feel free to post your thoughts!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

US Housing Bubble has Popped!!

2008-09-05T10:41:00.005-04:00

Article from Mortgage News Daily by Megan Ainscow - CEP News Ltd. 2008

A report on housing prices by Global Insight says that although prices for single-family homes are still heading downwards across the country, the rate of decline has gone down and "extreme overvaluation of house prices is essentially non-existent."

The only states that had extreme overvaluation in the second quarter were Hawaii, Washington, Oregon and Utah.

The country's housing prices are down 4.8%, falling in 152 of the 330 metropolitan areas included in the study. This is an improvement from the 6.6% decline seen in the first quarter of 2008 and the drop off seen in 295 (89%) of the 330 areas in the fourth quarter of 2007. The most severe losses are in California, Florida and Michigan. Indeed, 43 of the 50 worst metropolitan areas are found in these three states.

Still, though the numbers paint an improving picture the report says "real estate markets are not ready to recover. The building and financing excesses of the boom years have yet to be worked off. There remains a huge inventory of unsold homes on the market with foreclosures adding more daily."

The House Prices in America study looks at 330 of the top metropolitan real estate markets in the United States, representing 78% of the country's housing units.

With optimistic caution, I believe this is a sign that housing prices will regain traction in FY2009. Would you agree?

As always feel free to post your thoughts!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

$7,500… $3,750 if You’re Single!

2008-08-07T13:47:00.003-04:00

The new housing bill isn’t as much of a rescue as it turns out to be, at least for the proposed tax credit. The bill introduces a $7,500 tax credit for first time home buyers ($3,750 for single people) who purchase before July 1, 2009. As a matter of fact, the tax credit isn’t a credit at all. It’s actually a loan. A zero percent loan, but a loan nonetheless. Anyone who chooses to take advantage of the credit has to pay it back in 15 years via their federal filings. To me this is a round about way of offering down payment assistance without coming right out and saying it. No...you can’t use the credit at closing but you can use it during tax time. Even if you purchase a house in 2009 you can use the credit on your 2008 tax return by filing an amended return.

The National Association of Home Builders believes the credit will jump start the housing industry and get some potential buyers off the fences and into a new house. Once again, my stance is why can’t the government just keep the down payment assistance programs? I think that will be more effective than the tax loan…I meant credit.

For more information on the tax credit check out this site launched by the National Association of Home Builders, http://www.federalhousingtaxcredit.com./

As always feel free to post your thoughts!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

A Seller's Woes!

2008-08-06T17:06:00.003-04:00

As you know, seller assisted loans will cease due to the new rules of the Housing Bill. This is effective October 1 so current buyers in the market are trying to seize every opportunity to get every credit they can from sellers. And I don’t blame them. When I purchased my first house, my realtor explained to me the concept of “You never know if you don’t put it in the offer!”

Well now that I am on the opposite end of the transaction, I understand what some sellers go thru when considering offers. In our current venture, we are selling a single family home targeted to first time home buyers. So I understand that I will have to give a little. So the other day a first time home buyer submitted an offer that was below our asking price (of course), but they also wanted 6% closing help. I don’t mind giving closing help. But we intentionally priced this property below market so the new owner would have equity coming into their first home. We went back and forth with the traditional counter offer followed by the counter to the counter offer. Needless to say we just had to reject the final terms. The buyer wanted a little more than what we could give! Hopefully another interested buyer will drop by and offer more favorable terms.

Is that really the sign of the market or am I a seller asking for too much?

As always please feel free to post your thoughts!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

Foreclosures Lead the pack in types of Homes Sales!

2008-07-24T16:19:00.001-04:00

Home prices continue to decline across the country, while foreclosures make up 30% to 40% of all home sales. Wow!!

The only problem is that most of these foreclosures are REO properties. From what I have heard, purchasing these types of properties can be a disaster. A number of issues take place from the length of time it takes to get a reply from the bank to a loss mitigation department losing an entire short sale packet. What a nightmare! But if patience is one of your virtues, then by all means invest in REOs.

As always feel free to leave a comment!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

Fannie and Freddie Still in the News!

2008-07-23T12:12:00.005-04:00

Listen to yesterday’s interview with Henry Paulson, Treasury Secretary, discussing the ongoing events of Fannie Mae and Freddie Mac. According to Paulson, he has confidence in OFHEO and does not think Fannie and Freddie will need additional capital from the government.

I hope this is the case as those GSEs ensure a strong secondary market for home mortgages. The health of those organizations is essential to helping consumers outlast the current credit crunch.

What do you think about the condition of Fannie and Freddie? Do you think they will eventually come under government control?

As always, please feel free to leave a comment.

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

Dr. No!

2008-07-15T22:10:00.012-04:00

My family and I had a great time at last night's Screen on the Green at the national mall. Here are just a few of the pictures!

Bond... James Bond!

Great view of The Capitol!

My wife and kids!

We enjoy various events and like partaking in the festivities of the community. I hope you were there and if not, there will be another movie this Monday. HBO will be showing The Candidate (1972) starring Robert Redford.

Damien

"With Wealth, comes Responsibility!" Matthew 14:25-30

What's going on with the Mortgage Industry!

2008-07-14T15:50:00.005-04:00

As you are probably well aware, there is a lot happening in the mortgage industry. A lot of people are worried with the recent events of Fannie and Freddie and with IndyMac, the second largest independent lender, closing its doors today. Even our legislators are concerned. Charles Schumer, Sen. D-NY, sent a letter to OTS last week expressing his concerns in which he felt IndyMac was insolvent. This led to IndyMac’s customers bolting their cash out of the bank.

Personally, I think Senator Schumer bears some of the blame for IndyMac’s closing and the frenzy that a lot of consumers and investors (Wall Street) are in. Let the regulators regulate! Senator Schumer should have made better use of his influence rather than sending a random letter to OTS. That displayed a lot of negligence on his part.

Now don’t get me wrong, there is a financial crisis upon us. Banks are creating rigorous credit standards, mortgage businesses are being sold or discontinued all together, mortgage backed securities are still considered junk. We have a long ways to go until we get out of the woods. But don’t make an issue out of something that shouldn’t be a concern. According to Rep. Barney Franks, Chairman of the Financial Services Committee, Fannie nor Freddie will need the additional capital that the government is proposing.

Check out this interview with Rep. Frank.

FDIC Chairman Sheila Bair speaking on FDIC’s preparedness in this financial crisis.

Part 1

Part 2

What do you think about the current state of the lending industry?

As always, please feel free to leave a comment.

Damien

“With Wealth, comes Responsibility!” Matthew 25:14-30

Does Social Media have a Place in Real Estate?

2008-07-11T12:13:00.006-04:00

There is a lively conversation on Inman News on the topic about the role of online communities and social media in the real estate industry. It is packed with such great dialogue that I wanted to share it.

It’s funny, to say the least, that some people in the industry are still hesitant about moving towards technology to advance their business, market their experience or just to pick up old fashion knowledge. Social media and communities on the web is the future of real estate. Consumers are shifting more to the web in order to begin their research. No longer is it the days of calling a local realtor to search inventories. Everything is at your fingertips. The faster you can type in a keyword, the faster you will have information at your disposal.

Below are just some of the many comments from the discussion:

"My vision of a community is a place where buyers and sellers gather to discuss properties and agents. Where a client who has seen a property or worked with an agent could comment on that property or agent. This would be helpful for other clients when searching for homes or deciding which agent they will work with through the real estate transaction." - Justin Britt

“As communities evolve you will find more CONSUMERS finding online neighborhoods specific to their geographic area which include agents and other vendors that service that area; this is seperate from agents and real estate professionals involved in communities that support themselves.” - Allen Wright

“There needs to be a fundamental shift in thinking about social media among brokers and managers coupled with an influx of younger agents who no longer separate "tech" from the way they live the rest of their lives.” - Joe Strum

Check out the discussion and if you look around you will see my thoughts and opinions.

In the meantime, what are your thoughts about the advancement of online communities in the industry? Do you see it as beneficial or just a deterrent from the traditional property search?

As always, please feel free to leave a comment!

Damien

“With Wealth, comes Responsibility!” Matthew 25:14-30

Decreased Risk of Falling Home Prices in DC Metro Area

2008-07-09T16:23:00.009-04:00

According to PMI Mortgage Insurance Co’s quarterly Economic Real Estate Trends report, the Washington, DC metro area’s risk of falling home prices declined for Q1 08. The risk index fell by 7.7 points to 21.4 compared to Q4 07.

The risk is still pretty high in our area, but the good news, none-the-less, is that the risk of home depreciation is decreasing.

As always, please feel free to post your thoughts!

Damien

“With Wealth, comes Responsibility!” Matthew 25:14-30

My Mother-In-Law is in the Wall Street Journal!

2008-06-24T23:40:00.003-04:00

My mother-in-law (I affectionately call her “Mama G”, short for Gloria) moved to the DC area a little over two years ago. It’s funny how she ended up living here. I still get a kick out of it when I think about it. She came up one weekend from Florida to help my wife during her pregnancy as my wife was put on bed rest for almost 2 months. Mama G was going to stay for a couple of weeks in order to help out where she could. During this time, we kept rushing my wife to the hospital thinking the baby was coming only to be let down by false labor pains. With the excitement of our daughter almost arriving, Mama G decided to stay until she was born. So a week later, once our daughter was born, Mama G fell head over heals and decided to make DC her new home.

She stayed with us for a while, before she decided to rent an apartment in Alexandria. After that, she began to think about buying her own home as there was no need putting money into an apartment. So late last year, she purchased a condo in McLean, VA. She was able to go thru a seller-funded down payment program.

Now what’s the big deal with a seller-funded down payment? Why is Congress trying to do away with this type of assistance? My mother-in-law was a direct beneficiary of a seller-funded down payment assistance program.

The arguments against these programs don’t make sense to me. Lenders feel like a seller will more likely walk away from their home because they haven’t invested any of their own money. Give me a break! People don’t just walk away from their home, an apartment maybe, but not their home that they worked hard to acquire. Besides, lenders shouldn’t worry too much because they are not funding 100% of the purchase price. The seller is lowering the LTV by offering assistance. Can someone please explain to me why Congress is so bent out of shape?

Check out the article in the Wall Street Journal.

As always, please feel free to leave a comment!

Damien

“With Wealth, comes Responsibility!” Matthew 25:14-30

Screen on the Green is Back!

2008-06-23T16:38:00.004-04:00

Annually, HBO sponsors an outdoor film festival on the National Mall where thousands of people come to enjoy a movie. Every Monday beginning at dusk, a different movie is shown for almost two months.

Since I have been going to Screen on the Green, the movies playing tend to be older movies, classics. My mother who is a Turner Classic junkie will really appreciate these. During the festival, I appreciate her taste more and more with each movie! I know this year won't dissappoint me!

The 2008 schedule:

July 14 - Dr. No (1962)

July 21 - The Candidate (1972)

July 28 - Arsenic and Old Lace (1944)

August 4 - The Apartment (1960)

August 11 - Superman (1978)

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

Online Home Values? I Don’t Know!!

2008-06-20T16:07:00.004-04:00

There are a lot of varying views about automated valuation models (AVM). These are systems that generate an estimate of a property’s value without the use of an appraiser. Online sites such as Zillow, Trulia and Cyberhomes, to name a few, provide a service that produces the value of a home.

This online feature is part of the ongoing debate about the recent DOJ and NAR settlement. Some advocates of AVMs say these are just estimates and that consumers should not rely solely on the values from these websites. While those who oppose AVMs feel the values listed online can potentially harm sellers. For instance, someone looking to buy a house goes to the Zillow website and sees a home. That home will have a Zillow generated value called a Zestimate. If the zestimate is lower than the sales price, this could deter the buyer from inquiring about the property. DOJ’s ruling will at least give sellers the opportunity to opt out of their properties being displayed online.

I have to admit that I am a little biased as I agree with the opponents of AVMs. I have first hand experience in that we have a house on the market that we renovated. We priced the house competitively compared to the after-repair appraisal. But when you look online, the value of the property is less than the sales price. A first time homebuyer or someone new in the industry would rely heavily on the value displayed online. I think that consumers will need to be educated more and understand that online values are just estimates. They do not reflect a clear picture of a property’s value.

Here is a link to 7 disadvantages of AVMs.

Here too is a link to a very spirited debate on the 4realz.net roundtable. The topic is The Value of Home Values. Dustin Luther, once again, hosts an informative discussion. Some of the participants are David G of Zillow, Joseph Ferrara of Sellsius and Rhonda Porter of The Mortgage Porter. I really enjoyed this one!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

DC Foreclosure Rate Higher than National Average!

2008-06-19T23:59:00.013-04:00

According to today’s front page article in the Washington Post, a report for the Metropolitan Washington Council of Governments shows DC’s foreclosure rate jumped sixfold. For the year ending Feburary 08, 15,613 homes went into foreclosure. The rate jumped from 23 to 131 per 1,000 homes while the national average increased from 58 to 87. As a result, the Council of Governments is establishing an emergency fund that will support nonprofit organizations that provide mortgage counseling, food and money for housing for families in the area that are affected.

Eighteen months ago the region was not nearly as affected as other Metro regions across the US. John McClain, the reports author, said the spike in the region is due to a large number of new homes that were sold to first time home buyers utilizing ARM products. These mortgages are now resetting causing a lot of consumers to go into foreclosure.

Damien

“With Wealth, comes Responsibility!” Matthew 25:14-30

The Bionic House

2008-06-18T15:06:00.005-04:00

Do you remember that 1970s show The Six Million Dollar Man? Well this is the first One Billion Dollar House.

A relative sent me this article of the world’s first billion dollar house. I had to share it with you. Imagine this house in NW DC on Connecticut Avenue. Whoa!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

Why Pay Retail When You can Buy Wholesale!

2008-06-17T20:54:00.017-04:00

I have heard it say that this is the “worst real estate market since the Great Depression”. I’ve read that same phrase in numerous articles describing the current market. One of my good friends brings up the “Great Depression” depiction frequently (his wife is an agent I might add). Because I started investing seriously when the market turned and I recently decided to get my real estate license, he is still trying to understand my actions.

Let me help those who do not understand why people, like myself, take these risks… it’s because we are investors not speculating consumers. An investor is different from a consumer. A consumer acquires things out of emotion. They want something or they need something. And that’s not a slight to anyone because we are all consumers. Investors, however, acquire things (real estate) in order to create wealth. And this current market has all of the essentials of the perfect environment for investing. The only drawback in this environment is the credit crunch we are in. Credit isn’t flowing as freely as it once was. That’s another topic! However, real estate prices are going down making it a great time to start investing.

I was once told by a financial planner that people usually have the concept of investing backwards. They tend to want to buy an asset when the price is going up and rather than when the price is coming down. Mind you… I said price not value. An asset’s value and its price are completely different. He said that people don’t shop that way. The average person wouldn’t pass up buying a flat screen TV during the Thanksgiving Day sale to buy it a day later at full retail price. It’s like saying “That’s ok Best Buy. I want to pay you $2,000 for that Sony instead of buying it for $1,500. I know it’s on sale, but for some reason, I will feel better about the TV if I pay more for it.” Sounds silly doesn’t it. Why buy retail when you can buy wholesale?

That’s exactly what is going on in this current market. Real estate is being sold at wholesale prices. If you are thinking about investing right now, don’t look at it through the viewpoint of a speculating consumer. Become an investor and envision the opportunities that the current market has to offer!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

DC Investors Listen Up… Universal Design, a New Niche!

2008-06-16T00:25:00.008-04:00

Saturday, I was doing my usual scan of the real estate section of the Washington Post, and I came across an article about Universal Design. Based on the article, I think that incorporating universal design in the layout of properties targeted for renovation will become a niche in the DC real estate market. First off, let me explain the concept of Universal Design. Universal Design are principles that make a home “user-friendly” to people of all ages and abilities. For instance, wide doorways, easy-to-grasp lever door handles, cabinets with pull out shelves, front-loading washer dryers that have been elevated are just some of the elements that make a property easy to use by the elderly and people with disabilities.

Modified bathroom with wheelchair accessibility

The reason this is a good niche for local investors is that developers of new homes in DC are not accommodating this demographic as they target a larger consumer base. However, DC has numerous vacant and abandoned properties that can be renovated. So many, in fact, that the government has implemented an initiative called the Home Again Program. One of the goals of the program is to provide a means for the DC Government to dispose these properties. Last year, one of my friends, who is an electrician, took me on a tour of a property that he was working on for the DC Government. The property, which had previously been abandoned, was sold to a man confined to a wheelchair. I was blown away at all of the features and amenities of the home to accommodate the gentleman. Even before I came across the concept of Universal Design, DC was working with its residents with disabilities to find living arrangements that meet their needs.

The local DC chapter of AARP has redesigned a home in Northeast DC called The Andrus House. The home, named after Ethel Percy Andrus founder of AARP, was designed using universal design principles. The address is 2635 18th ST NE, corner of 18th and Evarts. If you are a local investor looking for a niche, I advise you to check out this home. You may have found that niche you are looking for!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

NAR Settles with DOJ! Did I Miss Something?

2008-06-13T19:29:00.007-04:00

A couple of weeks ago The National Association of Realtors (NAR) settled an antitrust lawsuit with the Justice Department in which the dispute lasted almost 5 years. At the heart of the matter were NAR’s policies that governed the online sharing and display of property information. DOJ found these policies restrict competition while not allowing consumers to opt for lower cost services from brokers.

In my opinion, NAR restricts the flow of property information on the internet because it feels threatened by a consumer’s ability to access information for themselves. NAR understands, and I agree, that the data from an MLS system is the most accurate and up-to-date, more accurate than Zillow, Trulia or any other real estate website. I just went to Trulia to search for a property I have on the market and the picture is incorrect (ouch!). This proves that if there were reliable resources on the web, let’s say… for properties that have sold in a particular area, consumers would depend less on brokerages. NAR understands the relevance of the MLS system and I think that if the information it houses was accessed via the web, it would change the business models in the industry.

However, some experts feel the ruling will not create any significant changes to the industry. (Check out this podcast hosted by Dustin Luther of 4realz.net.) Did I miss something, because I beg to differ! The ruling by DOJ is the beginning of a new era in real estate. Brokers will have to provide more information on the web and this will cause realtors to evolve in what services they provide and how they provide them. No longer will consumers have to be hand held. Which is not a bad thing! It just means realtors will now work with consumers that are already informed. Realtors won’t have to perform remedial tasks, like preparing CMAs. I think the ruling will advance the industry. Eventually we will see who is right on this one!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30

A Real Estate License, to Have or Not to Have?

2008-06-12T11:03:00.007-04:00

I am currently in the process of getting my real estate license. “Is that really necessary for an investor?” you may ask. Well, I have heard various, differing opinions about the matter. Some investors think it is beneficial to be licensed while others do not. The only argument against obtaining a license, that I have heard anyway, is that an investor is required to disclose the fact that he/she is licensed. When I talk to investors without a license, this is the only reason given as to why they choose not to. The fact that an investor would choose not to be licensed because they would be required to disclose this fact to a seller of a property they want to purchase makes no sense to me. Yes, I understand that there is a risk that the seller could later regret selling their property and then perform the old “I was taken advantage of” routine. In this case, the licensed investor could be held liable for any damages. But this wouldn’t happen if the deal is managed correctly. In my opinion, the advantages of investing with a real estate license FAR outweigh the disadvantages.

Now I’m not saying all investors should choose to get their license. I just don’t believe that their logic for not having one is full proof. Years ago in economics class, I learned a concept called opportunity costs. A quick and dirty explanation of this occurrence is when you choose one thing at the expense of another. Because you can’t choose both, the thing you gave up is called opportunity costs. This concept, along with the prodding of another investor I know (he is licensed by the way), is the reason I decided to obtain a license.

Let me explain… actually I’ll let the numbers explain. Simply put, an investor can add, at least, 6% to their profit margin by just having a license. 3% made on the purchase of the property and 3% saved in realtor fees when the property is sold. This is a significant difference when investing in high end properties. Or an investor can choose to give up those margins by not wanting to inform the seller that they are licensed and thus structuring win-win deals.

As for this investor, it’s a no brainer… to have is better than not to have!

Damien

“With Wealth, comes Responsibility!” Matthew 25:14-30

Yes... Even I am Blogging!

2008-06-11T01:09:00.011-04:00

I can't believe I'm blogging. Years ago when I heard about this concept, I thought "What's the rationale of keeping a journal on the web, that serves no purpose?" or so I thought didn't serve a purpose. Now look at me! I'm a..."blogger"!

With everything moving towards the web, my interest in blogging seemed to progress naturally. I started noticing that a couple of my friends were blogging. Their blogs were entertaining and it was an avenue they used to share their interests and experiences with others.

As with real estate, I see that technology is rapidly advancing. I can't wrap my head around all of the new ideas that are coming to the market everyday. Blogs, social networks, online communities are evolving all industries including real estate. It's not enough to just have a website. Consumers want to know your experiences and expertise before they decide to expend their resources. What a better way than to post an online journal for all to see!

Damien

"With Wealth, comes Responsibility!" Matthew 25:14-30