Real Estate News

For most of us, the idea of a better life is on our minds quite often. If you’ve ever thought about a nicer home, owning your car without a payment, or a vacation in the tropics without worrying about money, you are not alone.

If you are already at a point in your life where you are “comfortable” but simply want to lock in a solid retirement plan, or push the limits of your financial status, then welcome…real estate, as a vehicle, has accomplished this and more for many people.

In order to change ANYTHING in your life, including finances, you must not only make different decisions, but you must change the way you think. Your personal beliefs about money, real estate, the market, and your capabilities are based on your personal background, personality, life’s experiences, and dozens of other major influencers in your past.

Take CHARGE of those things which influence your thinking, behaviors and actions. Associate with like-minded, successful, and responsible people. They can make a significant difference in not only how you think about money, real estate and wealth, but the association you develop will bring to you more opportunities for finding deals, associates, and financing.

When you look for what could go wrong with a deal, you will always find something. When we say to ourselves, “I need more education before I make my first offer” we forget that TRUE education comes from applying what we learn, not the raw knowledge itself. Of course, it is important to know the basics. It would not be prudent to go out and expect to make money in real estate after simply reading one book in an afternoon. Expecting to become a millionaire in a weekend is ridiculous.

However, the bigger danger lies in substituting an excess amount technical knowledge for practical knowledge. Go to any real estate investment club and you will meet people who have attended 2 or more boot camps, have read a dozen or so books, and have been deluded themselves into thinking they are investors. They may have been “thinking” about investing for 2 or more years and have yet to get out and make an offer. If this is you, don’t despair, however. ALL investors, no matter what their experience, had an “incubation” period where they absorbed knowledge before going out into the marketplace. This period can be anywhere from a month to a year or more. This does NOT mean that you are doomed to become a seminar junkie. But after a while, it becomes painfully clear that more technical knowledge is not the answer. The REAL problem is our fear.

Conquering your fear

If you think you are alone in this dilemma, think again. With over 1 million investors in the United States, there is not a single one who didn’t show concern, worry, and doubt over his/her first deal. Everyone has doubts. Your mission is to conquer those doubts by reducing or eliminating as many risk factors as you can. This is easily accomplished with the following basics:

1. Due your due diligence. Nothing compares to crunching your numbers 2 or 3 times, and then running them past a more experienced investor.
2. Have a plan “B.” When markets or financing changes, you need a back up plan. Without a backup plan, you are opening yourself up to risk. If you can’t sell your rehab, you better be ready to rent it. If you don’t have the financial cushion to be a landlord, you better get one BEFORE you start the rehab.
3. Take action. The paralysis of analysis is the single biggest killer of wealth in this country. Due diligence is important, but without action, it is a wasted exercise.
4. Be accountable. Even Michael Jordan had a coach. Putting your plan into action all by yourself is foolish. Plan your business thoughtfully. Think big. Take small steps and get moving! Counseling with successful people will save you millions.

Successful people got where they are because they think and act differently than unsuccessful people. Their attitudes, actions, beliefs, and even their friends are different. There are people (even relatives!) who always look at what could go wrong, instead of who look at what could go right. When you have a mentor who believes in you and encourages you to grow, change, get out of your “comfort zone” and go for it, you will definitely experience new opportunities. The risk will always be there. How we manage that risk is a critical component. It is important to perform due diligence and “crunch the numbers” on your opportunities. But all too often, we look back on all the opportunities we missed, instead of reaching out and working towards those that lie ahead.

Sincerely yours,

Doug Crowe

If you’re looking for a way to reduce your utility bills and do something good for the environment at the same time, it’s worth taking a good look at your home’s plumbing fixtures. Older fixtures can waste a lot more water than you may realize, and a few simple changes can often make a significant difference.

TOILETS

The toilet can be one of the largest water users in your home. While toilets manufactured after 1994 are mandated by law to use 1.6 gallons of water per flush, most toilets manufactured between about 1980 and 1993 use 3.5 gallons, and pre-1980 models can use as much as 7 gallons of water every time you press that handle down.

One of the most obvious ways to save on water usage is to replace your older toilets with a new one. After some initial problems with the low-flow toilets of the mid-90s, when the reduced-water flush got a bad rap from not handling its waste disposal chores very well, manufacturers made significant design changes that greatly improved the operation of most toilets sold today.

In Europe, most new toilets feature a dual-flush technology that is really quite efficient. The toilet has two flushing buttons on the top of the tank: one button activates a 0.8-gallon flush for the removal of liquid waste, and the other activates a 1.6 gallon flush for solid waste. At least one manufacturer, Caroma USA (www.caromausa.com), offers these well-designed toilets for sale in the United States.

If you have an older toilet that’s in good working order but is wasting water with every flush, consider retrofitting it to use less water. One way to do that is with the Controllable Flush (www.controllableflush.com), which fits most toilet tanks and mimics the action of the dual-flushing European toilet. The no-tool installation is quite simple, and involves the removal of the old flush handle and lever arm and replacing it with the new components contained in the Controllable Flush kit. Pressing down on the handle and holding it for a few seconds allows a reduced flush of about 1.5 gallons, suitable for the disposal of liquid waste, while pressing the handle up raises the flapper valve up in the conventional manner, allowing for a full flush.

Toilet dams, available from many plumbing supply retailers, reduce the interior dimensions of the toilet tank so it holds — and therefore uses — less water with each flush. The typical toilet dam can save a gallon or more of water with each flush. The low-tech method of inserting a brick in the toilet tank, which causes the tank to displace less water, is not recommended — the brick can deteriorate and damage both the toilet and the plumbing lines.

You also want to be sure and check your toilet for leaks. If you hear your toilet running when not in use, you can check for leaks by simply putting a few drops of food coloring in the tank. Check it after about 10 minutes, without flushing, and if any of the food coloring has appeared in the bowl, you have a leak that should be fixed as soon as possible.

FAUCETS AND SHOWERS

Retrofitting your kitchen and bathroom faucets with an aerator is a great way to save water. Aerators introduce air into the water stream, which allows for good pressure with reduced water usage. Aerators are available for just about any type of faucet with internal or external threads, and simply requires screwing the aerator in place.

Aerators are marked with their water flow in gallons per minute (GPM). An aerator with a flow rating of 2.75 GPM or lower is typically considered low-flow, which will save both water and the energy required to heat it. It is estimated that a low-flow kitchen faucet aerator can save about 3 gallons of water per day in the average household, and a bathroom faucet aerator can save 2 gallons or more.

Replacing your old showerhead can be a real water saver as well. Here again, low-flow showerheads utilize air mixed with the water to improve pressure while reducing water usage, and still results in a shower spray that is invigoratingly strong. Look for a showerhead that uses 2.5 GPM or less, which are available in a wide variety of styles, including ones with pulsating massage action.

And finally, fix that that drip! In addition to being noisy and incredibly annoying, a small faucet drip that totals only two tablespoons a minute wastes about 15 gallons of water a day.

Remodeling and repair questions? E-mail Paul at paul2887@hughes.net.

You’re buying a new house. You’re thrilled and relieved. But if you’re like most new-home buyers, you’re also confused. What, exactly, do you really need to know — and how hard is it to find out?

Stage front and center on your “need-to-know list” is the price. That is easy to find out.

But the sale price represents only the first-time cost. How about the lifetime cost?
That’s harder to calculate, especially since you may not be familiar with this term.

As you might expect, the lifetime cost includes your mortgage payments, property taxes and homeowner’s insurance. It also includes the estimated cost for utilities, maintenance (repainting for example) and replacement of various “body parts” as they wear out.

While most new-home buyers rarely take the lifetime cost into account, it is a routine consideration for many, if not most, institutions, commercial enterprises and government agencies, as they begin to plan a new building that they expect to occupy for the next 30 to 50 years.

As a result, these building owners often specify materials that cost more initially but last significantly longer. Though nothing lasts forever, this strategy avoids the costs incurred in replacing cheaper but inferior materials several times during the years these building owners will be occupying the structure. This long-term perspective also puts a premium on materials and building details that increase energy efficiency and lower utility bills.

However, when the person constructing the building plans to sell it at completion instead of occupying it, the perspective and calculations are different. The first-time cost becomes a paramount consideration. This situation describes a production home builder. To attract as many buyers as possible to a given project, the builder wants a base price that is as low as possible while still covering land and construction costs and producing a profit. Materials are selected accordingly.

Buyers for their part want the most space for the lowest price. Because they assume they won’t live there for more than seven or eight years, they figure that the lifetime cost and replacement issue is not their problem.

But it will be for the next owners, who will pay the cost of the replacement parts and, unless they’re very handy, the labor cost to install them. If they adopt a similar strategy, they’ll end up replacing the same body part again or handing it off to the next owners, as their seller did to them.

For an individual homeowner, this is penny wise and pound foolish. Using a more durable product initially will save money in the long run, especially since many buyers end up staying in their new house longer than they anticipated when they bought it.

From a societal standpoint, this strategy is also a shortsighted waste of money and resources — what environmentalist Lester Brown, founder of the Earth Policy Institute and author of “Plan B 2.0,” described as an unfortunate consequence of our buy-it, use-it, throw-it-away, and buy-a-new-one mentality.

If you decide to take the high road here and use materials that are more durable and more expensive, how do you calculate their lifetime cost for the new house that you are contemplating?

If you’re working with an architect and a custom builder, estimating the replacement cost of the many body parts will be relatively easy. Every material will be specified, and durability will be a central factor as you choose between this higher-priced and longer-lasting item or that lower-priced and shorter-lasting one.

But, if you’re working with a production builder, it may be harder to get information on the durability of the materials he is using and their associated lifetime cost. Detailed specs, which the builder determines, are not routinely given out.

However, you can get a general idea by asking about the products used in the building envelope. They’re the ones that generally wear out first because they are subjected to the weather 24/7. The builder should be willing to give you specific product information, including the brand name, item number, and warranty information for the roofing, windows and siding. If the builder offers upgrades for these, you’ll need that product information as well.

Studying this material will help, but you also need to know how these products perform on a real house in your climate, which can have an enormous effect on their durability. For a candid assessment and some idea of the replacement cost, ask the staff at the local building-supply stores patronized by home builders in your area and at specialized suppliers of materials such as roofing.

The first-time and lifetime costs of materials are not the only cost considerations. There can be an environmental cost, or as Brown characterized it, “the environmental truth.”

For example, home builders routinely use vinyl for windows, siding, flooring, plumbing pipes, and a host of other applications because it is generally lower priced and durable. But, unbeknownst to most homeowners, polyvinyl chloride, or PVC, another name for vinyl, is not an environmentally benign material.

At every step of the PVC production lifecycle, hazardous byproducts are formed, including organochlorines and dioxin, which is so toxic that even an infinitesimally small doses (in the low parts per trillion) can damage human health, explained Bill Walsh, founder of the Healthy Building Network. A partial list of the toxic effects of these PVC byproducts includes cancer, reproductive impairment, impaired child development and birth defects.

The byproducts of PVC production are also highly persistent in the environment — that is, they degrade very slowly. Carried by water and wind currents, they have blanketed the globe, exposing virtually every mammal and person on earth, Walsh said. Our tissues contain dioxin that we have ingested simply by breathing air, drinking water and eating food, specifically animal products. People who work in the plants manufacturing PVC and its component parts, as well as those who live near these plants, have higher exposures, he added.

Alternatives for most PVC building products are readily available, though typically the nonvinyl product has a higher first-time cost, Walsh said.

But PVC building products will not disappear from the home-building arena anytime soon. The United States Building Green Council (USGBC) spent the last five years studying the pros and cons of four categories of PVC use: piping, siding, flooring and windows.

The study was prompted by a question concerning the USGBC’s Leadership In Energy and Environmental Design program, commonly called LEED, a nationally recognized green building rating system.

The question raised: Should a LEED credit be given for avoiding the use of PVC?

The Technical and Scientific Advisory Committee’s answer: No. TSAC found that when they compared the impacts on human health and the environment of the PVC product in each category with several widely used alternatives, the alternatives were also problematic. Flooring was the only category in which the group concluded that cork and linoleum are preferable to sheet vinyl and vinyl floor tiles, two commonly used flooring products.

Scott Horst, a Boulder, Colo.-based building materials life-cycle assessment expert and chair of the USGBC PVC task force, acknowledged that the group’s findings were controversial.

The group also concluded that a focus on the impacts of these building materials rather than the materials themselves would have been more useful, Horst said. Almost every durable building material can have a negative impact, he pointed out. The critical question for policy makers and consumers to decide is which negative impacts matter most: producing acid rain, contributing to global warming, or harming human health?

Drawing an analogy to a tasty and creamy ice cream cone, Horst asked which is worse — lots of calories or an excessive amount of fat?

A sensible answer is less of both, way fewer calories and far less fat. Looping back to the PVC issue, consumers and policy makers should push for building products that have a minimal effect on human health and on the environment.

Consumers and policy makers might be even more insistent about PVC products if they knew that PVC is not unique or irreplaceable and that other plastic polymers can be substituted for PVC in many cases, Walsh said.

At the very least, when new-home buyers consider the lifetime costs to build their dream house, the environmental cost of the materials they are considering should be factored in.

Further information:

Healthy Building Network, www.healthybuilding.net

“Environmental Impacts of Polyvinyl Chloride Building Materials,” by Joe Thornton. This is a free pdf download at the Healthy Building Network.

Katherine Salant can be contacted at www.katherinesalant.com.

(Private Real Estate investing classes available. For more information, contact Denise Powell at 630-889-9900)

Wednesday Class June 6th: Goal Achievement
Don’t just set your goals, establish a customized action plan that works around YOUR schedule, YOUR resources, and YOUR dreams. When you set up specific steps, along with acknowledging your obstacles, you can design a plan that works.

Thursday Class June 7th: Financing
With the recent changes in subprime lending and legislators trying to eliminate stated income loans, investors are required to not only understand conventional lending, but become proficient at creative financing.

Wednesday Class June 13th: Networking & Marketing
Developing a new business isn’t complete without a marketing plan. Professional networking MUST be a component for any entrepreneur. This module gets into the nitty-gritty of how to become noticed, remembered, and revered as the “GO-TO” person in any situation. The phrase, “It’s not what you know, it’s who you know” has never been more important than in marketing your business.

Thursday Class June 14th: Foreclosures
Understanding the complexities and legalities of foreclosures is extremely vital to any investor. Learn how to deal with lenders, structure short sales, and how to properly analyze deals that many investors can’t afford or don’t understand.

Wednesday Class June 20th: Wholesaling
Weak credit? Low on cash? Wholesaling may be for you! When you buy, fix up and rent out property you can become wealthy over the long haul. However, for most beginners, it is more important to strengthen one’s cash position. Wholesaling real estate to a more experienced investor is a great way to do that. No mortgage qualifications, no tenants, very little paperwork and you can be on your way.

Thursday Class June 21st: LLC’s and Corporate Entities
Making money is fun. Paying excessive taxes isn’t. Learn what type of entity to set up, where to establish it and how to best maximize the laws to your advantage. As a real estate investor, you are uniquely qualified to write off more deductions than most employees. Learn how to do it right. Taught by Randall Anderson, CPA, CFP, MBA

Wednesday Class June 27th: Lease Options
The slow down in real estate has taken many investors from the fast track to the slow track. For those of us who understand the time/value of money and real estate, this is an excellent way to build equity without the hassles of traditional lending. Risk is minimized and profits are maximized at the end of the transaction. Slow way to wealth and worth it!

Thursday Class June 28th: Negotiation
Of all the skills necessary for real estate investing, negotiation will give you the biggest bang for you buck. Learn phrases, psychology, and techniques that can earn you tens of thousands of dollars in just minutes. No B.S. but tons of common sense wisdom and ideas to help you double your income.

If you were to ask most realtors about the housing slump, many would say that not much has changed since it began in the early part of 2006.  Beginning in February of 2007,  most people looking to move up or move out, started their search in earnest.  While this didn’t create an immediate surge in transactions, many areas of the country have seen a noticeable increase in activity.  While part of the real estate downturn is behind us now, the buyer’s market will likely continue for at least two more years, foreclosures are likely to surge and “we’re heading into a year with some more price declines,” a real estate consultant told an audience of building-industry professionals on Thursday.

John Burns, a consultant who presented a housing market outlook during the annual Pacific Coast Builders Conference in San Francisco, said that a combination of factors, including low interest rates and unconventional mortgage products, dug deep into the pool of future home buyers during the prolonged real estate boom. And the market is still adjusting, he said.

“I know with a very high level of confidence that the number of foreclosures is going to surge,” he said, as a high volume of subprime loans and other adjustable-rate loans are headed for a major reset in rates.

“It’s really going to occur — most of it — next year, so we’re going to see some foreclosures and just be prepared for that.” The subprime market accounted for 18 percent of all mortgage purchases in 2005 and 25 percent of all home purchases in California, he also noted.

Indeed, while it is true that volume of transactions are on the increase, a gross oversupply of inventory still needs to be absorbed before we get back to “normal.”  Other economists and building-industry representatives also offered their views on the future of the housing market, and provided statistics on projected housing starts, sales and demographic trends.

Builders have dropped home prices to motivate buyers in the slowing sales environment — up to 21 percent in some markets — and “any new home you’re selling is a screaming deal compared to any resale deal a consumer is looking at” because the resale market has not been as quick to adjust pricing, Burns said, adding that resale pricing may catch up with new-home pricing.

Many of the public companies are still offering dramatic incentives such as 6 months of payments, plasma TV’s and new cars in order to spruce up sales.  If you want to understand where the market is headed, as opposed to where it has been, look towards what developers are doing.  Many tract builders are selling their land as opposed to waiting and developing.  The market must absorb a larger percentage of the current inventory, prior to returning to previous levels of building.

Meanwhile, National Association of Home Builders president Brian Catalde, who met with reporters at the conference, downplayed the problems in the subprime mortgage market. “Economists generally agree that the downturn in housing will not push the nation into a recession, and the situation in the subprime mortgage (market) is not likely to dramatically affect the economy.”

He said that the association expects the housing market to begin to climb out of its slump early next year, though “the first stages of the return will be sluggish.”

The association expects a 21 percent drop in total housing starts and 18 percent drop in new-home sales this year compared to 2006 — the association’s projection is 1.45 million housing starts in 2007, including 1.1 million for single-family home starts.

Western states continue to dominate the list of U.S. states with the fastest home-price appreciation, though former leaders such as California, Nevada and Arizona have been bumped out by states such as Utah, Wyoming, Idaho, Washington and Oregon.

San Diego and Miami are among the “poster children for wild rides in the market,” with significant swings in real estate prices, Bostic said. Some common elements for markets with declining prices are a high degree of speculation and a significant spurt of building, he also said.

Many west coast and midwestern investors, however, see things a bit different.  In the Carolinas, Tennesee, and Texas, homeownership is traditionally more affordable.  Younger families, singles, and retirees are flocking to the warmer climates in droves.  According to one census bureau statistic, over 50 million people will be moving south of the 35th parallel in the next 20 years.  That fact alone will make the southeast, south and southwest nearly extremely attractive for not only the retiring baby boomers, but the service industry employers and employees looking for growth.