Fruit Store Lessons About Real Estate

EXPENSIVE BANANAS DON'T SELL

It's amazing where you find life's little lessons. I caught on to one while at a local food store where I was, just the week before, noticing the high price of fruit and vegetables. The numbers were high and of course I didn't buy any that week, figuring that I can do without for a little while or just buy frozen vegetables and hold the line on fresh fruit (I was still able to make a smoothie with frozen fruit).

So, I travel back next week and lo and behold, I notice the price of bannanas, which were $1.19 per pound to $.99 per pound. Of course they had ripened a bit over the week to a bright yellow color from the green / yellow color the week before. Thinking to myself, it's not a bad price, but still a little high, (although I did consider buying) I passed. Maybe at 89 cents a pound I'll pick some up.

Well, when I go back, what do I see? $.49 per pound. Needless to say, I was able to buy at less than half the price from two weeks ago all because the bananas started to show a few dark spots and nobody was buying before.

So, guess who got a great deal on bananas?? ME! Because;

• I waited for the right price to buy
• The price was high, nobody bought
• Price adjusted, still no one bought
• Fruit started to turn, priced forced to low point in order to avoid losing the product
• Everything SOLD OUT!

     

Real Estate - Banana's? Here's the lesson. I can't say how many times I go on a listing appointment and bring with me data that's used to get a handle on the market value of a home and the owner decides to go above the recommended list price to "test the waters" looking for a price based on emotion rather than solid data and experience. 

The listing, like the high priced banana's, sits on the market with no showings for a month or more (in most cases more). So after 3 to 6 months on the market with no real interest, The owner decides to lower the price a little closer to the recommended list price from 6 months ago (although he should get a new market analysis). Guess what? It gets a few looks, but no offers, another 3 to 6 months have passed and still not sale. The house listing is going stale, the owner is disappointed and the only offers coming in are low ball offers from investors looking to steal the property, thinking that the owners have become desperate.

Had the owner priced the property right, it might have sold within the first 30 to 60 days. Seasoned real estate investors look for hard data when buying or selling a property and price (or offer) accordingly. No emotion, just the facts. Investors know that time on the market lowers their bottom line and stops them from moving on to the next deal (or in the case of a homeowner, settling into  their next home).

Summing it up.... 

High Priced Bananas don't sell, and neither will an Over Priced Home!

• Get good data
• Price it right
• Sell your home 
• Move on. 

Simple!

* Feel free to comment below or send an email to dominick.leone@gmail.com 

Let's Plant a Tree

Inspiration is found in many forms. It could be a work of art, a successful person you look up to, or even a notable quote. I heard a quote that really made sense to me and felt a need to share.

"The best time to plant a tree is 20 years ago, the second best  time is NOW"

Looking back at 40 plus years of my adult life and thinking of all the opportunities that have past me by all because I hesitated to "plant a tree" when the time was right, because of fear of the unknown results. In other words, my hesitation cost me opportunities to better myself.

We live in an ever changing world and if you take a look back about 10 years (or even 20), you'll see what I mean. We live in a country that has opportunities all around us, but sometimes we miss the forest looking for the trees. We keep looking for the get rich quick plan, which doesn't really exist. The get rich at a reasonable and projected growth plan does exist, that's why, had you planted your tree 20 years ago and nurtured it properly with good morals, hard work and diligence, it would already be providing an abundance of fruit.

Opportunity is always around, to say the least! Another saying saying is "One Man's Poison is Another Man's Bread". When we were attacked on 9-11 the stock market dropped to an all time low out of fear and confusion. Within a few days, investors were out planting trees in security, airline stocks and more. Needless to say, the smart money that was planted seventeen years ago, has produced quite a bit of fruit for investors today.

The Real Estate Market left some deep scars from 2008. A lot of people lost their homes and fortunes because of banks and lending institutions, over extending loans to people who couldn't repay them. Investors who were able to stay fluid with cash, came out the winners, buying pre-foreclosures, Short sales and Bank Owned Properties, better know as REO's . Unlike the stock market of 9-11, the short sale and REO markets are still offering discounted properties from people who either walked out and dropped off the keys to those who were evicted by the foreclosure process.

We are currently in a real estate market where inventory is low and interest rates are starting to creep upwards. The biggest problem for home buyers is the ability to qualify under the new bank lending rules. Not good for a lot of home buyers that had credit issues from past and current debits (the Poison), but great for real estate investors and Private buyers (who maintained some cash and good credit) who are looking for rental properties to add to their portfolio.

Today, the rental market (the Bread) is still flush with renters and in need of fresh inventory to satisfy the amount of tenants still reeling from the housing downturn, hurricane Sandy and other misfortunes, looking for a good home to start getting their lives back on track.

So, if you see the opportunity to "Plant a Tree" in the real estate market, down the road the tree may just be able to provide some tasty fruit (maybe sooner than 20 years).

Leave a comment or send me an email, I'd love to hear your thoughts. - Dom.

Rental and Second home investments still strong

The market is still in full swing and swinging even faster with the anticipation of interest increases looming in the near future.

Click on the article below and let me know what you think.

What's in Store for the Luxury Real Estate Market in 2017?

Reprint from: RISMEDIA, Saturday, February 11, 2017

— Eight years after the housing bubble, homebuyers are still exercising caution. This is particularly seen in the luxury real estate market, which ended 2016 on a slow note. A combination of oversupply and rising housing costs in cities like San Francisco and New York left buyers feeling choked out. Will the market improve in 2017? Experts have mixed feelings.

"We have seen inventory come back at a steady pace, and buyer demand is strong enough that it will continue to keep the market moving as we go through the next 12 months," David Charron writes in The Washington Post.

But others aren't so sure. Over-development across the country and around the world has left the luxury housing market "soft," according to Beckie Strum at Mansion Global. The result is competition for dollar buyers in the flooded market; however, thanks to the Brexit and other global political upheavals, the dollar is strong compared to other currencies. This means that buyers looking to spend with American money will be able to get even more for their cash.

Rising Mortgage Rates Play a Role
In addition to the increase in both housing costs and supply, mortgage rates are also rising around the country. The biggest jump occurred right after Trump was elected, reflecting a cautious optimism that his presidency would be good for the economy. In addition, in December 20216, the Federal Reserve raised interest rates by 0.25 percent. This is a signal that the Fed is seeing and trusting positive economic conditions: the 2016 rate hike was the second time in a decade that the Fed decided to raise rates.

Implications for REALTORS®
What does this mean for REALTORS®? Higher mortgage rates in the early part of this year could potentially coax more buyers into making a home purchase before mortgage rates get too high.

"We should expect the early part of 2017 to be filled with a brisk pace of not only homes going under contract more quickly, but also taking less time to reach a settlement date," Charon writes, which means that the length of time that a house stays on the market can be expected to drop in the early part of the year.

In addition, as the post-election euphoria wears off, cities like New York could still be faced with a surfeit of available properties. The housing market in the Bay Area is also expected to struggle. Home prices in the area have been steadily rising for the past five years, jumping to $680,000 in December 2016. The combination of high home prices and rising mortgage rates led to a decline in Bay Area home sales at the end of the year.

According to Zillow, home sales will continue to drop on the coasts, while the markets that will see stronger sales will be further inland. This includes surprises like Nashville, where the housing market is blooming as a result of lower rent prices.

Even as renting becomes more affordable, Zillow cautions that construction for new homes may be impacted by the labor shortages that may result from Trump's restrictive stance on immigration.

"A shortage of construction workers...may force builders to pay higher wages, costs which are likely to get passed on to buyers in the form of higher new home prices," according to Zillow Chief Economist Dr. Svenja Gudell.

Comments and opinions welcome.

Skyrocketing Rents Begin to Fizzle (not as much as you may think)

RISMEDIA, Friday, February 03, 2017:

Skyrocketing rents will begin to fizzle in 2017, driven by a multifamily market marked by less starts and oversupply, according to the Freddie Mac Multifamily Research Group's 2017 Multifamily Outlook.

"Demand for rental units is at a historic high due to demographic changes and lifestyle preferences, but increasing new supply and other factors are likely to moderate multifamily market growth in 2017," says Steve Guggenmos, Freddie Mac Multifamily vice president of Research and Modeling. "In particular, landlords are likely to pull back on rent increases as new supply enters the market and vacancy rates rise."

Rents are expected to grow at their 2016 pace; vacancy rates are expected to reach 5 percent for the first time since 2011.

 For more information go to: http://www.freddiemac.com/

A Local Perspective by: Dominick Leone

Northern Ocean County in New Jersey is still reeling from the effects of Super Storm Sandy, not just destroying homes but peoples credit and lives in general. Just after the storm, there was an unprecedented rush to locate rental housing for the storms victims who were left homeless. Years later, those who lost their homes, started to suffer financial hardships while trying to untangle the FEMA paper-jam and insurance nightmares. It drove some people to just abandon their homes and move on. 

Banks and lending institutions, not being as liberal as they would like (especial local community banks) under the Dodd-Frank regulations, developed a new set of hurdles for homeowners to jump over. Those who abandoned there homes had foreclosures on record because, while paying rent, they couldn't afford to continue a mortgage as well and this became a massive burden on their credit scores. This carried on to owners of homes who ran out of government assistance waiting for their homes to be raised and rebuilt, also having the burden of rent and mortgage payments at the same time. 

I'm not saying that things aren't getting better, I'm saying that there are still people trying to dig themselves out of a tough situation and their FICO scores are suffering because of it. So, buying a home is not within reach as of yet for many of the people who lost it all in the storm. To add insult on top of injury, when your credit is damaged (regardless of circumstance), renting a home isn't easy ether.

With the inventory becoming depleted and credit scores dropping, the rent rates jumped to all time highs. Like I said before, things seem to be improving a little, but I don't see much of a decline in rent rates for 2017. 

Those who invested in distressed and "bargain" properties with a fix and hold (for rent) portfolio may be the smart ones, creating  an annuity plan with equity growth in the future paid by their tenants. Passive income, 26 year depreciation on the property with added capital improvement and business tax benefits seems like the the winning formula in the long term real estate game.

Housing Value at Record-High: Will You Be Able to Keep Up?

Not a good time to be sitting on the fence

New buyers may be loosing opportunities and renters may remain renters

Housing’s collective value grew to $29.6 trillion this year, a record-high reflecting 5.7 percent appreciation—an additional $1.6 trillion—in 2016, according to a recently released analysis by Zillow. The most housing value in the nation is in Los Angeles, Calif., New York, N.Y., and San Francisco, Calif., at 8.6 percent, 8 percent and 4.2 percent, in order.

The continuing growth in prices, however—now marking a full recovery since the crash—has the potential to push more prospective homebuyers to the sidelines, says Zillow Chief Economist Dr. Svenja Gudell.

“Housing is incredibly important to us personally and to the economy as a whole,” says Gudell. “The U.S. housing stock is worth more than ever, which is a sign of the ongoing housing recovery. As buying a home gets more expensive, affordability remains a concern for many, and these numbers highlight just how much people are spending on housing. The total value of the housing stock grew nearly 6 percent this year, a pace that will likely mean some American families are priced out of homeownership.”

Despite this year’s appreciation, approximately 60 percent of housing markets remain below values reached during the bubble years, according to the analysis.

Renters, to compare—with approximately 635,000 new renter households formed this year—paid $478.5 billion in 2016, up $17.7 billion from 2015. Apartment renters paid $50 billion more than single-family home renters, and the most rent was paid in New York and Northern New Jersey, at $55 billion.

Reprinted from RIS Media