Starting this June, Yours Truly will Co-Host the "Real Estate Radio Network" with Willie Lambright on AM 1160 KVCE !

I'm extremely excited to make this announcement.  Willie already has a great line up of world class real estate experts coming on his show to discuss all aspects of the real estate profession.  Currently there are high profile mortgage brokers, real estate brokers, investment companies, staging companies, expert foundation companies,....and now, a property manager. 

Yes indeed.  I will be representing what is possibly the sexiest and most glamorous of all the real estate professions each Thursday for one hour, from 9a-10a.  I'll be discussing issues from screening to leasing to maintenance to liability to evictions, and I hope to do so with great panache.  My personal goal is that everyone who starts the show awake will finish the show the same way, and I will take much offense if you don't.

PS I will also be doing random spot checks of your radio preset buttons, and I expect to see the 1160 button worn thin.   

Could Property Managers Help the Market Recover?

Tighter mortgage standards and rising foreclosures have driven up the number of rental properties, and more real estate agents are taking advantage of the shift and moving into property management. 

Given that it can be easier to find renters instead of buyers in many markets, the National Association of Residential Property Managers reports a nearly two-fold jump in members over the last five years to an all-time high of 3,400. 

Census data show that renter household formation has outpaced new owner-occupied homes over the last four years; the number of owner-occupied dwellings fell by about 147,250 per year from 2007 to 2010, but the number of renter households surged to 718,500 per year during that time. 

Property managers generally make less than real estate agents — about $1,800 per property per year versus $10,000 for one sale — but they have steady business in the current market, although their fees are on the decline in some areas due to increased competition.  Even so, some experts believe that property managers could play a big role in helping the housing market recover — especially if banks employed skilled property managers to handle their portfolios.

Source: "Once 'Ugly' Property Management Grows as U.S. Home Rentals Surge," Bloomberg BusinessWeek (11/29/11)

(c) Copyright 2011 Information, Inc.

You may ask, "What in the world is a TVIX", and I may tell you.  It's not a candy bar, and it's not a way to make money.  If you missed the bandwagon and don't know what it feels like to be Enron'ed, or Madoff'ed, don't feel left out, you know what it's like to be TVIX'ed.  Take a look at this chart...although it's difficult to see, you will notice that the graph's Y axis (Price) is scaled down to fit- the peaks on the would actually be up towards the top of your computer monitor, which makes the precipitous drop just that much more disgusting. 

You can see right about mid March when the security drops into the Mariana Trench out of nowhere, on no news.  Later in the day after the market closed, the company that issues this ETN announced that it would be issuing more shares...which means...drum roll please....INSIDER TRADING STOLE MY MONEY!  Yes, the SEC is investigating.  No, I will not get my money back. 

Which brings me to the point of this blog.  Why are we investing our money with thieves?  This isn't a new phenomenon, it's been going on since inception and will continue forever.

Yes, the market may be a way to make an enormous amount of cash if you are very skilled.  However, stats show that around 90% of day traders lose money.  I wouldn't be surprised if it was more than that.  Wise investors say buy and hold, but when I look at charts of the broad market, growth is extremely slow!  Mostly up and down in a sort of range.  Why do I want to put my money in securities, hoping and praying that I don't get TVIX'ed again? 

For more reasons than I want to get into here, I'm convinced that we're conditioned to place retirement funds in public securities for the benefit of the Powers That Be first, and us second. 

Buy real estate. 

Phoebie Carcot with Oyezz Real Estate just successfully completed a short sale deal for a client I referred to them, and I couldn't be happier.  She did a great job during the transaction, the communication was excellent, and I want to give credit where credit is due.  If you have questions about a possible short sale, there are other options you should explore first.  Please give us a call to evaluate your particular situation.  If it turns out that a short sale is the best route to go, we'll get you connected with a pro at Oyezz.

Here's a great reason to hire a professional property management company. 

We're asked on a monthly basis to accept payments directly from a tenant when their Section 8 voucher won't meet the rent amount.  Even owners have asked us to do this, most because they are simply unaware of housing guidelines.  Of course, these extra payments are forbidden, and must be done on the sly, without Section 8's knowledge.  Without exception our answer has always been and always will be "NO".

From New York, here's a text book example of why you should follow the rules.  Niagra Capital, a corporation whose president was a swindler in the 1st degree, accepted payments directly from Section 8 tenants without the housing authorities' knowledge, and now they're paying the price- big time.

FROM THE OFFICE OF THE NEW YORK ATTORNEY GENERAL:

"This week, Niagara Capital pled guilty in State Supreme Court to a single count of Rent Gouging in the First Degree, a class E felony. Under the law, the company faces a possible fine of $10,000 or double the amount of the corporation's gain from the offense.

Under federal law, the maximum rent that may be charged to those who receive Section 8 benefits is established by the federal Department of Housing and Urban Development. Landlords are not allowed to charge tenants any additional rent.

According to charges, the company and its employees required more than 30 Section 8 tenants to make additional payments of up to $265 per month for an "option" to purchase the rented properties. The purchase of this "option" was in fact mandatory and Niagara Capital employees made it clear that Section 8 tenants would not be allowed to rent the properties unless they also agreed to pay for this "option."

By its plea, Niagara Capital admitted that these additional payments were, in actuality, additional rent that it was not authorized to collect.

As part of its plea, Niagara Capital admitted that it collected approximately $70,000 in illegal rent payments from Section 8 tenants between 1996-2000. Palano has agreed to repay $70,000 to the Section 8 tenants, plus interest."

For those who have the double misfortune of owning a home with no tenant and losses for the year...can you claim rental losses if it wasn't actually rented?   Short answer- YES

From a NARPM Affiliate:

"A lack of tenants won't nix a write-off of rental losses, the tax court says.

Your mother always told you not to read straight from your notes when giving a speech, because it makes people fall asleep. She also told you not to fill your blogging with dull stats and boring quotes, because it will make your audience hate you. My apologies to your mother and you, because this is a combo stat / quote post.

“About 76 percent of home owners believe their home is worth more than their agent’s recommended listing price...”

“On the other hand, 68 percent of home buyers say homes are overpriced”

Source- Daily Real Estate News | Wednesday, December 07, 2011

This reminds me of the statistic you've heard where the majority of people think they are "above average" drivers.  Likewise, it's now a fact that 3 out of 4 people believe they know more about real estate values than the professionals they hire.  "Sorry dear Realtor, but 75% of the population says you just don't know what you're talking about."   Or, if quoted at a Realtor convention, “Way to go Realtors, looks like we're doing a great job of earning our clients' confidence, ¼ of our them at a time!”

This shows how a lot of the battle in selling a home can occur before the home is even listed.  It's a testament to the importance of proper data gathering and fact presentation. 

As an aside, here's another statistic the article left out:  All 3 of those 3 clients are "above average" drivers.

Occasionally it strikes me that a great deal of the time we spend working is solely because people don't tell the truth!  I imagine that the mountain of extra, burdensome, paper-heavy work that lying causes is second only to the fact that humans have terrible memories.  I have no stats to back this up, but as we print, sort, and file a forest of thinly sliced trees each day I see how much time is wasted keeping people honest.

Here I go, trying to overcome my previously noted bad memory in order to recount these stories accurately...

A real estate agent brought in an lady's application for a fairly nice property.  He had told me beforehand that she was a good tenant with a few bumps on her credit from an identity theft incident a year or so back.  Indeed, the lady had good income, stable work history, no criminal records, and her landlord gave her a good review.  She had documentation of the ID theft, which described someone purchasing various items on credit during a time period, and supposedly renting an apartment temporarily in her name, without her knowledge.  (We have yet to find this to actually be true, yet the ID theft excuse is brought up more frequently than you would imagine).  In this documentation was an address that she did not include on her application as a past residence, claiming it was part of the fraud.  Belinda checked all the other references, including attempting to locate and contact the owner of the property at this address.  Belinda was unsuccessful in finding the owner, and knowing something was not right with the application, told the agent it was denied. 

The agent was furious, and let us know it!

Belinda decided to go through the application again, and this time dug out a copy of the check that the Realtor brought for the app fee.  What do you know...the address on the applicant's check matched the address the applicant claimed was used in the identity theft!!!  Good work!  This lady had gone to extra lengths to provide documentation to cover a flimsy story, in order to deceive both us and her real estate agent.

I called the lady's real estate agent to confirm that she was denied.  He let me know how upset he was at us- especially since he mentioned the ID theft issue to me before he submitted the app!  I calmly interrupted to say that that she lied to us, that the address on her check matched the address she claimed was rented fraudulently.  The phone went silent for a moment.  When he started speaking again it was in a much quieter tone.  "Oh...", he said slowly, "...I guess she lied to me too." 

A Few Interesting Stats

http://realtormag.realtor.org/sales-and-marketing/feature/article/2011/10/generate-revenue-rentals

Here's an article describing Morgan Stanley's interest in purchasing single family homes for investment.

I don't agree with all of the assertions.  I find it hard to believe that the move towards renting will be a permanent fundamental shift, though it may be a fairly long term shift.  We've learned the hard way that the largest investment institutions are frequently fallible in their predictions. 

Nevertheless, the thought of billions flowing into the SFH rental market is worth noting.

http://speakingofrealestate.blogs.realtor.org/2011/10/31/morgan-stanley-u-s-becoming-rentership-society/