Posted by: docktohome | January 2, 2011

PostAWeek 2011

I am joining the challenge of postaweek in 2011 here on WordPress!

This was my original intention when starting my blog but I have been thinking more than doing.  Posting weekly will be a nice challenge and will encourage me to work harder towards my original goals and purpose.  I am making a commitment to myself and those of you who visit my blog that there will be a new post each week!

I will help support others by visiting their blog, writing comments, and liking posts! Wishing all the participants good luck and happy blogging!

—–Diana

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Posted by: docktohome | January 2, 2011

Why Not Live in a Box?

Roughly a year and a half ago my dad came across an unusual type of building construction, buildings made out of shipping containers.  These structures can be used as office, retail, industrial, or residential space.  If you decide to maintain the look of the containers these structures have a very modern aesthetic.  For those who don’t want to live or work in a place that looks like it belongs on the back of a truck, the containers can easily be made to look like a non-container building and blend in with other housing.  These container homes can be built at a fraction of the cost of normal homes and much quicker.  Container homes and even ‘container cities’ are being built all over the world including the US, Canada, the Netherlands, and London.  The sustainability of this type of construction is also to be noted as the main structure is used from a recycled container and requires very little new materials.  These containers provide a sturdy structure as they were built originally to stand up to all weathering conditions that would be experienced during transport of goods, as well as being able to be stacked up to ten high.  Another aspect that makes container homes appealing is there level of move ability.  Unlike a ‘brick and mortar’ structure these containers can be easily transported to new locations, meaning you could essentially pick up and leave and bring your home with you with relative ease.

Benefits

  •  Sustainable
  • Affordable
  • Easily Transported
  • Durable
  • Quick Construction
  • Easy Expansion

Here are a few sites where you can learn more.

http://www.ecopods.ca/index.php

http://www.containerizedhomes.com/

http://zigloo.ca/

http://www.containercity.com/

http://www.greenhomebuilding.com/articles/containers.htm

http://www.containerhome.info/

Posted by: docktohome | December 20, 2010

Reality Stars Foreclosure Fortune

I admit I am guilty of enjoying a few useless reality TV shows, although it is quite counterproductive I seem to get trapped for 30 minutes- 1 hour at a time.  A show that has been on for a number of years is Bravos ‘Real Housewives’ series which has had seasons in Orange County, Atlanta, New York, New Jersey, DC, and the latest Beverly Hills.  On the show these housewives lead extravagant lifestyles that include fancy group vacations, events, fashion shows etc…  But are these women really people that the viewers should be idolizing over? NO!  The occurrence of financial troubles has become so frequent among these women that the show should probably be renamed to what some critics have said ‘The Real Broke Housewives’.

From rental evictions to full blown bankruptcy, these housewives have faced it all.  On the OC housewives Jeana Keough, Tamra Barney, Lynn Curtin, and most recently Alexis Bellino have faced housing troubles.  Jeana Keough one of the older members on the OC cast received a Notice of Default on her home sometime in 09, but apparently wasn’t even aware of this until she was notified by a columnist at the OC register.  Jeana supposedly avoided foreclosure by getting a loan modification, but even this is not clear as some sources say that her home has been put up for auction.  Tamra Barney, ‘the OC’s hottest housewife’, after paying a premium for her home before the market took a drop reportedly sold her home in a short sale after being unable to keep up the payments.  One of the newer housewives, Lynn Curtin has recently faced her own housing troubles when her and husband Frank were served with an eviction notice at their rented Laguna Beach home on the latest season.  Turns out this wasn’t the first time the Curtin’s had been evicted nor the most recent eviction noticed which they received at their rented Aliso Viejo home.

The latest housewife to be facing foreclosure is OC’s Alexis Bellino, whose home was reportedly supposed to be sold at auction earlier this month.  Bellino and her husband had thought in August that they had avoided foreclosure through a loan modification, but according to the OC register the bank changed its proposal.  The Atlanta Housewives such as Lisa Hartwell and Sheree Witfield have also faced their share of housing troubles.  Sheree Witfield, the diva of the Atlanta cast, had her home sold as a foreclosure in mid 09.  Lisa Hartwell and former Raiders linebacker husband Ed Hartwell were forced to leave their Georgia mansion after facing foreclosure.  They reportedly bought the home in 2007 for $2.9 million and it was sold as a foreclosure for $1.9 million.

Probably the most publicized financial pitfall of the Housewives is that of Teresa Guidance and her husband from the New Jersey cast who filed for bankruptcy after having a whopping $11 million in debt.  In June there were reports of their home to be foreclosed on but I have not found any more recent news on this matter.  All in all I think the viewers of this series should keep in mind that this life isn’t as lavish as it seems.  If anything the show is encouraging reckless spending for the purpose of upholding a materialistic self image.

Posted by: docktohome | December 7, 2010

Distressed Sales & Market Value

Many investors in real estate today acquire properties through a short sale or foreclosure.  These circumstances allow both investors and retail buyers to purchase properties under market value.  But how do these types of transactions affect the real estate market??  There is a positive side that comes from purchasing a short sale and a foreclosure but there are negative consequences that must also be considered.  Since there are many so called creative real estate investors out there today, why can’t we come up with another solution to this mortgage downfall?

Benefits

The most basic benefit of acquiring these types of deals is that you are purchasing real estate on the market, which is better than not making the purchase at all.  Another benefit is that the buyer is getting the property typically below market value, or even at a deep discount.  For a homeowner who has decided to do a short sale on their home they have avoided a foreclosure and the bank has agreed to take less then what is owed.  So far this seems like a reasonable solution, the homeowner walks away and the investor gets a great deal.  Now if a homeowner or investor is unable to negotiate a short sale the home will go into foreclosure.  In this case the homeowner has lost their home but the investor can still purchase these properties at a discount.  This scenario isn’t all roses as the homeowner has lost their home but on the buyers side they are still getting real estate at a discount.  Off the top it seems that these situations (short sales or foreclosures) provide an upside whether it be for the investor, homeowner, or both.

Disadvantages

So what are the disadvantages of doing a short sale?? Imagine you are a homeowner who has maintained current payments and do not have a loan larger than the value of your home, you decide you would like to sell your home.  As a homeowner you have kept the home in good condition and there is almost no deferred maintenance so you feel that your home is worth at least fair market value.  You hire a realtor to list your property, but as they pull up comps they find that other homes in the area have sold, are in contract, or are for sale at a price much lower than the value of your home.  Why is this? Because a large percentage of these homes were sold in a short sale and/or are in foreclosure.  The low prices that are offered by a short sale or foreclosure affect the values that can be placed on a traditional sale while also hindering the ability of market prices to bounce back.  As an investor the low prices are enticing but I think we should consider what affect these types of purchases have on the recovering of real estate prices.

The national average according to an April 2010 article on the Business Insider online says that 29% of all sales are distressed sales.  This percentage varies greatly among different areas in the country.  Here is one graph that accompanied the article and depicts some areas of the country where distressed sales make up almost 65% of all sales.

Posted by: docktohome | December 3, 2010

Freedom to be happy

Posted by: docktohome | November 30, 2010

The Fairfield House

The House

Over the Thanksgiving holiday my dad and I endured a very tedious drive from Orange County to Phoenix.  We left on Wednesday to go and visit my grandmother for Thanksgiving.  A few weeks prior our tenant at our rental home in Mesa called me to let me know that there was a water leak in the back yard.  After asking a few questions she explained that there was water squirting up from under a brick path way in the yard.  It wasn’t a big burden for the tenants to water the trees manually so I had them do that until we were able to visit.  We hadn’t been to the house since the tenants moved in so we informed them that we were going to do a walk through during our visit.  When we go into the house we were shocked at what we saw…. The house looked like it had been staged it looked so nice!! It was a very pleasant surprise.

Anyways here are some photos of our visit, and one of our first repairs to the house.  To back up a little my dad had arrived at the house before I did and asked the tenant to run the water and point out the problem, nothing happened… But my dad still thought it was a good idea to pull up the bricks to try to find the problem.

Dad hammering into the mortar to get the bricks out

Under the bricks was a thin layer of concrete

Me “getting my hands dirty” removing the broken concrete

Trying to find the water line…..

After removing the bricks and digging down into the dirt there was no water line in sight.  Before tearing the walk way any further we ran the water one more time to see if there was any evidence of leak….nothing! No leak means no repairs!  It might have been a fluke that the apparent leak no longer existed but either way we could not fix something that didn’t appear broken.  We of course couldn’t leave the pathway torn up so we put everything back in and re-laid the bricks, the pathway looked good as new!

After resetting the bricks….

 

 

Posted by: docktohome | November 19, 2010

Know Your Dreams

Before making any choices in life you must know your dreams.  This can be related to anything; personal philosophy, occupational decisions, relationship choices,   eating habits, long term goals, or all of the above.  For the purpose of giving an example, I relate it to my personal career choice.

For me I want to be a successful real estate investor.  When I think about this determination I have to ask myself why, why do I want to be a real estate investor?  To truly be successful you must uncover the source of your reasoning and go much beyond the surface.  If you’re like me when you actually attempt to do this you might find it to more difficult then you anticipated.

If asked that question why I wanted to be a RE investor a surface response would be, “I want to be a real estate investor so that I can make good money.”  Not to say this is a bad response, because it’s not, but these answers must be continuously broken down until you truly know you have reached the root of your reason.  To further break down this response I would next ask myself, “why do I want make good money?”  Knowing the answer to this question is extremely important otherwise there will be no motivation to make it.

To continue with the personal Q&A a response to that question might be; “I want to make good money because it will help me control my time.”  What do I need time for?  Is it to travel, teach, learn, or spend time with family and friends??  You can see how your responses will shape the next question you ask yourself but you must continue to ask why, why, why.  This will help you identify your most basic reasons for your actions and allow you to set detailed short term goals.

This is a process that I think everyone should do and I hope it will help you to look deeper and consider your motives.  You might realize that your motives are wrongfully supported and that you must reevaluate your decisions.  No matter what you find these realizations will give you a sense of personal enlightenment and help you to understand yourself.

–Thanks to my friend Andy for helping me to realize that I need to do this for my own personal life and goals.

Posted by: docktohome | November 18, 2010

A Little Inspiration

Found this wonderful video on my friend Kameron’s blog. Enjoy!

Thanks Kam. http://kameronbrown.blogspot.com/

Posted by: docktohome | November 8, 2010

Barter: The smartest way to beat a down economy

I flew into Reno Thursday night to attend a two day conference called the “Steele 300 Trading Event”.  It is hard to properly describe what this meeting was about, but basically it was a group of people who had came together to trade, barter, exchange etc.. You could bring to the conference anything of value this could include: real estate, notes, fine art, guns, automobiles, time shares, jewels, business opportunities/services and anything else you can imagine.

With the government printing so much money our currency is being devalued at an alarming rate.  To avoid taking a loss by holding their assets in the form of cash it is only sensible for people to look for other inflation proof ways to hold their assets.  This ended up being mostly real estate but a few other things were brought as well.    Many of the attendees were agents or brokers and represented clients who either had a problem that needed solving or were just ready for a different opportunity.  In the world of exchanges the phrase “one man’s junk is another man’s treasure” is more than true. 

The turnout at the event was relatively small with only about 30 people.  Of these 30 about 6 of us were either totally clueless or very new to the concept of bartering.  Most of the other individuals were extremely experienced and very savvy at making deals.  Between everyone in the room there was probably closed to 120 million dollars worth of real estate and 20 million dollars worth of cash, what I had contributed less than 1% of this.

These people are problem solvers, so they get excited about someone who comes to an event like this one with a big problem.  Each person has an opportunity to share their biggest problem and what they have/want.  Collectively the group bounces ideas off each other brainstorming possible deals that will solve problems and create win-win solutions, it’s an awesome experience. 

 I brought two things to the conference; my dad’s Harley and 2 acres of land in Lancaster, CA that my parents purchased 12 years ago.  Before going to this conference my dad did not believe deals could be made with either of these possessions, but I got offers on both and I’m going to share with you what they are.

1998 Harley Davidson Sportster Sport

The offer: An Embassy Suites timeshare in Kauai, HI

                1 Floating Week

                $1400/Yr in fees

The terms: Equity for Equity

 

2 Acres Land in Lancaster, CA

The offer: 320 Acres of gold mining property SW of Carlin, NV

The terms:  Give our 2 Acres in Lancaster + 50k Cash and give the seller a 3-5yr option to purchase the property back.  For however many years the option is the seller will pay 10% per year on the initial investment of 100k (50k worth of land, 50k cash), plus a 10k bonus at the end.  If the seller does not exercise the option to purchase the property back we get the land delivered free and clear.

Ps. The owner values the property at 1.2 million.

Posted by: docktohome | November 2, 2010

The Real Life Cash Flow Game!

By Andy Techmeier

In the Phoenix market today, buy and hold is a great strategy… but who wants to be a landlord??? You might be saying, “Well you can just get a property manager.” Odds are if you do that, you won’t have a lot of cash flow and are speculating on when you can cash out. Well either way we are all hoping this market turns around so our properties will get appreciation and we can make some money, but wouldn’t it be nice to make money every month while you’re waiting for that day to come?

In this article I’m going to talk to you about lease options and why they are such a good fit to maximize return, and minimize hassle. Now, at least in Phoenix, is the best time for buy and hold, and lease options are a great way to create cash flow and long term wealth.

So you just bought a property and want to rent it. You have good credit and were able to get a loan with 10% down, and let’s say this property is worth $100k. Now because you’re an investor you bought it with some equity, let’s say you got it for $90k. So you put $9k down plus $3k for closing and finance the rest which brings your month PITI (Principle, Interest, Taxes, and Insurance) payment to about $600 per month with a 30 year fixed mortgage. Quick disclaimer, these numbers are conservative estimates that actually allow for possibility of better return. It’s always better to under promise and over deliver! Rent for this house and the neighborhood runs about $800 per month… great right? Now we’re talking no HOA’s, but you still have all the other expenses as owner and landlord of this house. When you consider maintenance, up keep, management, and also possible future hiccups with tenants that would call for legal action you’ll be lucky to break even. So at this point if you paid a 10% management fee and had no additional expenses, your cash on cash return on invest would be 12% ($120 per month x 12 months, then divide that number into down payment, $9k, plus closing cost, $3k, (120×12)/(9,000+3,000)) but that’s not real because you will have expenses.

With lease option things get much, much better. First and foremost the renter is now a buyer. They are leasing with the option to buy down the road. This is good for two reasons; 1. They will put up option money to have the right to purchase. And more importantly, 2. They are now owners of this home and will act accordingly, not only in behavior by taking better care of a property they own, but bearing the responsibility of maintenance and repairs for their house. It gets even better! Because you are giving this renter the ability to own their own home you can charge a premium for the monthly for this added value. Why rent down the street for $800, when you could OWN this home for only $1900 down and $950 per month? All of this information shows you how a lease option is a much better way to create cash flow from a buy and hold property, but there is one more thing. We determine the selling price today. This house that is worth $100k can be sold on the option for $115k. Considering you bought with equity, you have a guaranteed return of 27.7% ($25k of profit/$90k you paid) just on the capital gains alone! Now let’s take a look back at the monthly return. Your cash flow goes up from an unrealistic $120 per month, to a very realistic $350 per month. Because of the option money and last month’s deposit you get about $3k when they buy. This means your new cash on cash return is 47% (($350×12)/$9,000)!

This is a great scenario for both buyer/renter and seller! There are some other aspects of this strategy that I’d like to tell you about, so if you like this article or have questions. Please comment with any questions so they can be answered and let us know if you like this and would like more.

Thanks.

 

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