Monday, December 14, 2009

Update for the last 3 weeks

Things certainly seem to be slowing down a bit in the rental market, which is typical for December. One of the vacancies was filled, and I have a firm commitment to rent one of the others around the 15th of this month. Three others remain vacant despite move-in incentives.

The first Wednesday of the month, I dropped off a sailor Christmas tree ornament retired Navy friend of mine in Long Beach. I went by and saw my grandma's new shower and bathroom in Reseda. Had a good conversation with a friend of mine in Santa Clarita. Then I attended the High Desert International Code Council meeting in Victorville. That was quite the trip around southern California.

Most of this time has been spent looking for clients, work, and working on the rentals or interviewing potential renters. Note to people looking to rent: treat it like a job interview, don't show up late without calling and don't look like a complete vagrant. Just saying.

I took a two day road trip to Boise, Idaho. I visited some friends up there, while my buddy took care of business. That was Monday and Tuesday the 7th and 8th.

Now I don't feel so well. I'm downing juice, Airborne ® , vitamin C, and drinking lots of herbal tea. Yesterday I made a hot toddy with some very harsh single malt scotch. Phew!

Over the last couple weeks, while waiting for a negotiator for a short sale, I've been looking at a lot of the regulations coming down the line from the EPA and other government agencies, and how they're going to affect the housing market or, at least, the value of some homes. There are a lot of changes slated, and there's not much chance of avoiding them, as the various agencies and bureaucrats make law by passing regulations, without any voter oversight.

This has led me to question the value of property ownership in general. There are definitely those who should own property, but it is not everyone, and not every property. Older properties are going to need extensive energy efficiency upgrades in order to be sold. With the proposed healthcare reform, the IRS will be enforcing compliance, which means that if for any reason you do not wish to participate, your assets will be liened by the IRS, this includes your bank or your property.

All of these things have really caused me to question the value of owning "things" and property ownership in particular. I would and do put a premium value on any arable land with a water supply. You can't go wrong with a property that is able to grow it's own food, and with possible cap and trade legislation and the fact that the north central valley of California was denied irrigation water this year (to save the delta smelt), you can bet food and energy costs are going to go up. If you can ship your food to yourself from your own property, then you can save on both fronts.

What all of this leads me up to is this: I've tried to compartmentalize my blogs and separate out the various aspects of my life, but property ownership is by it's very nature political, as property is always subject to the vagaries of politics and legislation. Over the last several administrations, property rights have declined, and the current attitudes seem to be contemptuous of property rights on several levels. So I am going to start a political blog in addition to the other ones I have.

Thanks for reading this rant, I hope it was somewhat clear. If not please ask questions, as they help me clarify my thinking and positions.


Sunday, November 22, 2009

The week in review

Wow! It's been a busy week. Still cleaning up rentals. Got one finished and a new tenant for it. Still working on another, and 2 are still ready to go with not much in the way of qualified inquiries, though in this market, I may just lower my standards.

Can't believe it's been over a week since I've posted. I've had several things I've wanted to say, but with all the cleaning and such, I been a bit bubble brained by the time I get home...maybe it's the cleaning chemicals.

I've commented before on the things that people leave behind, and I think it's time to mention the things they take. Things that go missing are typically anything not nailed down. I don't know how many sink strainers have been taken over the years. I also make sure that there is a full complement of working lights in a rental. these often go with the renters too. I've been lucky insofar as appliances have not been taken from the rentals, yet (knock on wood). This week they even managed to take HALF of the security chain lock on the front door...HALF! Now that's just inconsiderate and lazy.

Slightly related to items taken, are items replaced. In a number of rentals, doorknobs or locks get broken and replaced by an inferior quality item. I use Kwikset brand locks on all my exteriors and Kwikset or Schlage on the interiors (it just depends on what I find on sale as they don't need to be re-keyed--sometimes the sale is at a garage sale or thrift shop or Craigslist as I know how to rebuild a number of lock types). When tenants mess up the doors, the handy ones among them repair them (half-assedly most of the time) and put a new doorknob on--99% of the time a POS, off-brand, fall apart when you turn it, take it to the recycle bin, piece of soon-to-be scrap metal.

Well, after that rant, I must say, Thanksgiving is coming up this Thursday, and I'm leaving town. Going to see Mom and her husband. I do have a lot to be thankful for. I can think of much worse things renters could do to a landlord, and maybe some day (when I know longer have residential rentals) I'll publish a list.

Happy Thanksgiving in case I don't write until afterwards.


Saturday, November 14, 2009

9 Tips for improving your credit score, today's activities.

This was sent to me from RISMedia via Lowe's. So here's the link.

I just got back from a conference in Murrieta for  Voice of the Martyrs.

We have to go to an Adhoc committee to talk to the county service area about lowering the water and sewer prices. Over the last 7 years they've gone from around $75 every 2 months to $215 every 2 months. I have eight units and am paying $1700 plus use fees every two months.
The building code would allow for half the water meters I currently pay for, but the county will not allow it. The units are old, and were hooked up to the sewer before the previous owner bought them. There is only one sewer connection, but the county bills me for eight. Maybe we can get something done.

Thursday, November 12, 2009

One more regulation for landlords to deal with.

As of April 22, 2010, those of us who are landlords and contractors will have to have another class in regards for dealing with lead paint in houses. This will further depress the value of older buildings along with the new energy codes that are coming up.

For more information, here is the link courtesy of the Apartment Owners Association.

The Trip to ADM

So, we went down to Automobile Driving Museum in El Segundo, CA yesterday. It's open Tuesday through Sunday, 10am to 4pm, with a suggested donation of $5 for entry. We met the Curator, Earl. There is a large collection of Packards with some other vehicles as well. The 1989 Batmobile is there for a bit, and right now, there are some Darrin coaches.

The is a normally aspirated Mercedes Benz diesel coupe in the back of this photo. The Batmobile is through the door and to the right.

A Honda 110.

A few bikes as well.

Unfortunately, the low sun, put a lot of glare in the pictures and I was just using my cell phone.

Some classic and the 89 Batmobile.

I had a fun time and if you're going to be down near LAX and have an hour or so to kill it's a nice time. Oh, and btw, they have owner's manuals for a variety of cars for sale (not cheap) and a library that you can browse on site with a lot of specialty books and magazines.

Wednesday, November 11, 2009

Heartfelt thanks to all the veterans, today.

I always feel a little strange saying something like "Happy Veteran's Day", because we are remembering that there are those of us who will put our lives and limbs on the line for the preservation of our country. So "happy" seems inappropriate, unless we are all happy that some are willing to make these sacrifices.

I spent time with friends talking business and cars. I went to lunch and got sick for about 5 hours afterwards. I went to the Automobile Driving Museum in El Segundo. I have pictures, but don't feel like posting them at the moment. So perhaps later.

Monday, November 9, 2009

Things people leave behind--and things they take.

I am always amazed and amused by what people leave behind. I get a lot of cleaning products and yard tools. Mops, rakes, brooms, dust pans, and an assortment of chemicals. Maybe the tenants are trying to make up for not using them in the first place. Or they just don't want to move them as they won't use them anyway.

Of course, the things they take are interesting too. Why take the sink strainers?  Why take all the light bulbs? I supply lightbulbs for every fixture and the plugs and strainers for the sinks and lavs. Anyone care to answer?

Cleaning at the vacant units

So, I've got the left behind trash out. The large items have been moved to the curb and the disposal service called for large item pickup. Someone took the couch already. The power will be on sometime tomorrow. Had carpet guys over, but the estimate went from $7/yd to $13/yd, so I may tile the living room, or steam it several times and hope for the best. Scrubbed the countertops, washed the cabinet exterior, mopped with ammonia in the kitchens & baths, swept the garages, raked the yards, and still need to do more.

Anyway, gonna play the cargo area shuffle, as I remove tool boxes, and load the vacuum and steam cleaner to take to the rentals that need cleaning. Then I need to get some things in storage and bring them back home, leaving the vac and steamer at the unit which won't have power until Tuesday (whoa-o-oh, voices carry).

Thursday, November 5, 2009

November Begins

It's been a busy beginning of the month. Escrow closed for one client. I dropped off an earnest money deposit for another. I had the normal collection of rent. I'm cleaning up after renters and listing stuff for rent and for sale. I also installed did some repair work.

A couple things I had to do were plumbing. I capped a 1/2" copper pipe that was used for a swamp cooler. It had a saddle (or vampire) tap, and the tap was leaking, so I removed it. The mineral content in the water had caused a very large hole to form under the tap, so I cut off the pipe with a hacksaw, cleaned up the edges and slipped on a 1/2" Sharkbite® fitting. The fitting went on in less than 10 seconds. I can solder, but this is so much faster. They can even be removed with a plastic tool. They are available at Home Depot. Lowe's has a similar product, I think it's called Gatorbite®. They cost around $5 instead of $2 but save so much time, and are way cheaper than calling a plumber. 

I also replaced a low boy toilet with a standard height toilet. The copper piping is surface mounted on the brick wall. The 't' fitting had to be moved 4" to the left to allow the tank to clear the angle stop (my fault), and so I cut the pipe and used 2 of the 1/2" couplings to do this. Once again, saved a bunch of time. This particular run of pipe has caused me some problems soldering before.

I hope to have more updates later. Last month was crazy busy, and this month has a lot of catch up to do.

When is it better to rent?

As I was waking up this morning I was dreaming about giving away everything I owned and just living on whatever God provided for me and my family. It was a radical dream and got me to thinking about the benefits of owning things, real estate in particular, and that led me to thinking about when it would be better to NOT own real estate.

If you go to Karl Jeacle's Mortgage Calculator you will find that most of the first 7 years of payments go towards the interest on the home loan on a 30 year mortgage. If you as a buyer, are buying an older home there are also maintenance costs. People generally end up as caretakers for the banks property during this time. Unless the properties are increasing in value fairly rapidly it may not make sense to buy a home.

I was looking at homes in Ventura County by the ocean, and it's much cheaper to rent than buy. If you want to live by the ocean, Ventura County is beautiful, and has several places that are fairly inexpensive to live as a renter. In fact the rents are $1500-2000/month less than a 30 year mortgage and Mello-Roos would be.

In addition to the direct costs of ownership, there are indirect costs. Certain areas have higher effective tax rates due to local municipal and county bonds. There are also  utility costs to consider. Most landlords pay for some utilities such as trash and water, and others pay for or subsidize some heating costs.

During college, I had an apartment where the landlord (for whom I waited tables) paid for the building hot water. I never turned on the gas; I cooked with a microwave and a hot plate, and Long Beach never go cold enough for me to need anything other than an electric blanket. Not only did I not have the monthly bill, I didn't have to pay $150 for a utility deposit.

The other question is whether or not you want to stay in the area you're in for more than ten years. Unless you're sure you're staying at least that long, you needn't buy unless you are sure you're in a rising real estate market. During the boom of the early 2000's my uncle bought a condo for my cousin to rent. The payments were cheaper than renting, and he made twenty grand by the time my cousin graduated. In a flat or down market, you can probably find an inexpensive rental, even with less-than-perfect credit. If you have good credit you can probably buy a repo for less than rental costs, but you'll need to get estimates on the repair bills, which may drive your costs higher as many repo's are older properties.

You should definitely look into all the costs of ownership before jumping into buying a repo. Freddie Mac has a PDF that gives estimated life expectancies. It would be wise to look at the various appliances in a house and note the dates of manufacture on them, and ask any home inspector what the approximate age of the roof is--though you might be able to find the roof age at City Hall or the Building and Safety or Community Development offices (wherever a contractor or owner has to pull a permit for work.)

To sum up, it may be better to rent until you can save up enough of a down payment to get a 15 or 20 year mortgage.

Monday, October 26, 2009

Even More Renter Drama (or lack thereof)

I have been trying to get in contact with a tenant who was to pay me around the 15th. After several unsuccessful attempts, I asked the neighbor if he'd seen her and he replied, in short, that he thought she had moved out.
I went to the unit. The lights were on, so I called to the house several times with no answer. The tenants across the way were looking through their door and I inquired if they had seen my tenants. The volunteered that they'd helped my tenants move. I checked the gas meter and it was off, and the garage door was unlocked.
I opened the garage door. I looked at all the trash on the floor. At least they left the ladders they borrowed from me, and the paint they were going to use for the trim (that I had provided). I took some pictures, but they didn't upload like I wanted them to. The doors were all locked. I am not one of those landlords who carries keys to all the apartments, and I don't have them master keyed (though maybe I should reconsider that), so I loaded my ladders up and talked to the tenants from across the way.
They, M and J for now, said that my tenant mentioned that she owed money and was moving out. I don't know why she hasn't contacted me. I'm easy to get in touch with, by mail or phone. Someone's got to be able to lend you a phone.
Anyway, it's been quite the month for tenants leaving. One moved out due to moving into a senior park. Another left due to threat of eviction. This one just up and left--I only wish they'd just told me to come and pick up the keys. Another of my tenants is buying a house and I'm the agent and we're hoping to close this week, or early next.

Doorknob Forensics

Okay, the title says doorknobs, but I'm really talking about the entire mechanism, not just the knobs. I'm going to tell you, right now, you can tell a lot about what goes on inside a place, by checking out the doorknobs.

Okay, it's now 10am of the morning after I started that paragraph. Yesterday was a long day. I just spent an hour or so emailing and calling people to deal with a minor glitch.

Doorknobs, handles, strikers, etc. My level of irritation at the moment is ...well...very high. So I went in to rekey the locks of a rental that had been vacated the day before. Usually I do it immediately, but it was one of those days when everything was scheduled and more events popped up, but I wanted to get the keys back from the renter ASAP.

The "man of the house" thought of himself as something of a handyman. He fixed a couple things for me. Things that he or someone in the house broke. I'd spoken to him, the lady, and the kids of the house about slamming doors and security screens. Evidently no one listened. The doors were slammed so much that the striker latches are pretty well worn down. The door knobs came loose and evidently the renter stripped the screws or lost them, because the machine thread screws in two of the eight handles were replace with coarse drywall screws; effectively ruining the handles for future use. The backset inside one of these handles was also broken, which would explain the complaint about the door being hard to open.

Over the last 12 years I've accumulated a lot of locks and pieces. Now I just have to spend the time fixing and wondering about some people's children.

Thursday, October 22, 2009

Coming Opportunities

I got to bed before 10pm last night which was good. I had been unable to sleep the last few nights and had been up until 1pm or later. A couple of the things that were stressing me out are drawing out to their conclusions. I'm not happy with the conclusions, but I'm happy to wrap up the onerous situations. The only way to deal with bad news is head on.

Speaking of 'bad news' there were articles on record foreclosures and the problems in the commercial real estate market in the last week. I was talking with a broker about the coming wave of REO's that would hit the market in CA.

In the article on foreclosures, it talks about people walking away from homes that are upside-down on the equity. It also mentions that banks are not finishing the foreclosure procedures in down markets. I can attest to that.

I was in the sauna at the gym the other day and talk turned to the economy and, of course, real estate, when one of the guys admitted to not having made a payment in about a year and a half. We're in the Inland Empire, a market that has lost as much as 75% of it's equity since the housing market collapse.  It's probably  better for the banks to leave defaulted "homeowners" in the houses as vacant units often get heavily vandalized.

With all that talk, it seems bleak. But on the upside, if you have the money or can get it(are "well capitalized" in industry jargon) you have the opportunity to buy some bargains out there. Furthermore (I love that word), there is talk of extending the $8000 tax credit AND giving it to any buyer (not just first time home buyers).

Don't think this is just generosity on the part of government. If people are willing to buy property at higher prices (and a tax credit makes this possible) than local governments have higher property tax bases to collect from. This allows the county and state governments to finance more of their own expenses without asking for federal money (they will anyway--what governmental agency ever says it can make do with less money). So we may see more opportunities for investors to get a tax break from buying in a down market.

If you're thinking of transitioning from the residential to the commercial rental market, opportunities are just around the corner. As net income is the best indicator of value of a rental, remember to look for hidden costs. The include local taxes and regulation that take their toll on businesses (your new renters) and high utility costs that you may be responsible for (or upcoming rate changes). As commercial tenants are generally responsible for their own maintenance, you can invest across the country.

Saturday, October 17, 2009

I need something like "Dragon think and type"

I find myself wishing for a 'think and write' scanner that I could wear to bed. I have a couple good ideas that bring me to a semi-lucid state every evening and just don't wake up enough to come type them, or write them in the notebook on my side table. I also have a digital voice recorder...that's no use either.
Oh well...just waiting for "Dragon think and type V1.0"...or even the beta.

Sunday, October 11, 2009

The rental is clean.

The one 2 bedroom rental is clean now. I had someone look at it, but evidently she's out of minutes or changed her mind.

Most of the day was spent messing with cars. Sold some of the parts off an 89 Nissan Maxima, and dropped the tanks off an 88 Chevy 3+3 that my buddy Bob and I are building for my brother.

Saturday, October 10, 2009

Beginning of the month--Collecting rent, etc.

It is now the tenth of October. It has been an eventful 10 days. I have been very busy collecting rent, supervising two moveouts, filing my taxes, and complying with local government.

Time are tough and I'm taking partial payments on more than one unit. I've got vacancies that in units that I've never had problems renting before. People have moved out of the area, and developers have new houses that are renting out at $995/month. I've dropped my prices on units that I've spent thousands upgrading. Victor Valley Waste Reclamation Agency has made massive increases on water and sewer fees. On units that used to have a base cost of $80 every two months, I am now paying almost $215, and that's before water usage.

One of the moveouts is still in progress. The people are too far behind to come close to catching up; I've tried to help them as much as I can, but can no longer do so without jeopardizing the property. There is still stuff to be moved out, cleaning and repairs to be done, and I haven't gotten the keys back, but I'm hopeful. An eviction would take about 4 months, and the people are making a sincere effort to move.

Some other renters moved out. They returned the keys on the 6th and were moving some stuff out of the unit. The lady seemed surprised that I was charging her rent until the 6th. She reasoned, "But we weren't even here for the most part," to which I replied, "..but I couldn't use the unit or come in and clean, and you still had keys.." which elicited an "Ohhhhh...I get it".

Her move out brings me to the following. You know how doorknobs are big germ carriers? Well here are some pictures of one of hers. I always rekey my locks between tenants. I do it myself.

The top picture was actually cleaned a little before I took the picture. The second is with a bit of scouring with a 3M pad. The final is everything put back together. You can see the 3M pad underneath. Maybe if I get a request I'll show you how to rekey a lock. I only use Kwikset or Titan locks. There are reasonably priced and don't break after a year like some of the cheaper locks (Bulldog comes to mind).

Finally got the taxes filed. My wife was great. I'm horribly disorganized as far as paperwork goes. I know I missed a couple thousand dollars in write-offs, but last year was so bad, I'm getting back everything I paid in.
Some good news. My accountant only charged me $775.

I've gotten three separate weed abatement notices in the last couple weeks. One is taken care of, two more to go. This is just the short version.

I'm tired and really don't have anything more to say tonight.

Friday, October 9, 2009

Free Dump Day at the San Bernardino County Dump

It's this October 24th. These days are usually very crowded. The dump opens at 7am and the line starts around 630am the last time I went. Dump fees are around $50/ton with the recycling fee. This is good for getting rid of large items that you usually can't get rid of.

Monday, September 28, 2009

Listing Houses

Today I need to list some rental units for a family trust. I think I shall give each of them their own blogspace in order to advertise them in addition to the MLS listing, and then refer them on Craigslist.

Friday, September 25, 2009

Codewise Consulting

My long time best friend who got me into Building Inspections just opened his own consulting firm. He's incredibly knowledgable, with years in the field as a commercial electrician in addition to years as a plan checker and building official.
Check out Codewise Consulting.

Water Heaters: Tankless Vs. Tanks.

A good article from Builder Online on tankless vs. tank costs.

It doesn't address the fact that many people take longer showers and don't save as much, and that's not a great idea if you're on a septic system.

It does not address solar water heating. Solar water heating takes up more space and has some fairly high retrofit costs, but most saves money immediately if installed at construction.

Here's a link to an inexpensive $1000 system.

Wednesday, September 23, 2009

Some Bad News for the High Desert and Green Development.

In an article put out by Investor's Business Daily (IBD) it seems that Dianne Feinstein and the Wildlands Conservancy are looking to stop development of a solar/thermal electric plant.

How to use a power sewer snake.

I figure you're reading this because you want to know how to use a rooter. If you're afraid of things that typically go down the toilet or have a sensitive sense of smell, don't read anymore.
One of the things you might find yourself doing as a landlord (and maybe as a homeowner) is snaking out your sewer drain. It might be because of roots, papertowels, kid's toys, tennis balls, rags, feminine hygiene products--ok you get the picture. I've found all of the preceding items. Pity me.
Both Home Depot, Lowe's, and Harbor Freight Tools carry plumbing snakes. I bought the one by Ridgid for around $400. Harbor Freight's runs around $250-300, but doesn't look as sturdy or as safe, as it has an open cage design as opposed to the plastic shell that surrounds both the Ridgid at HD or the model that Lowe's carries. Also, buy the PVC gloves that are nearby.
In any case, it generally costs around $200+ for a drain cleaning service to come out and snake the main line. I've heard that Mike Diamond charges $99 for any drain, so that would be a good deal, depending on when his guys are available. Most inexpensive rooter services take at least 8 hours to get to your job, in my experience. So if you've ever had a rooter guy out 2-4 times, you could've bought the tool.
Now that I've blabbed your ears off (eyes off as you're probably reading this) I guess I should stick with the HOW TO in the title:
1. Take off the cap to the cleanout (you might want to be wearing those gloves, eye protection, and shoes you don't care about--I wore my Tevas today, but I knew I could just wash off my feet.)
2. Let water flow out while you go plug in your snake and determine where the best place to put the machine is--that's why you take off the cap BEFORE you bring your snake over.
3. If you haven't put on the PVC gloves yet, now's the time.
4. Place the snake 2-3 feet from the cleanout.
5. Put one of the attachments on the tip--I use the root cutter for most jobs. It's U-shaped. The spade bit is also good, but as this is on a rental I want to see if my tenant is to blame, because then I charge them for my time. There is also a corkscrew/spring attachment, but I don't like this one.
6. Start feeding the metal spring down the clean out by hand. Don't use the motor yet. When you have pushed the spring as far as you can by hand, stop pushing.
7. Adjust the spring so that there's a little slack, but not too much as the spring can form a loop and catch your hands, fingers, or just smack you. The spring can also catch skin, cloth, or your gloves in the grooves, so treat the machine with respect. Then step on the foot switch and hold the spring loosely while the motor turns the snake. Do this for about 15 seconds to one minute. After some practice you'll be able to notice differences in the sound of the motor.
****Safety Warning**** If the snake loops up, you take your foot off the switch. Then put the machine in reverse. Tap the foot switch to unwind the snake.
8. Repeat steps 6 and 7 until the water has drained out of the pipe or you've reach the end of the snake.
9. Put the snake in reverse, but don't push the switch unless you need to.
10. Start pulling the snake back and load it back into the drum.
****Warning**** The snake is a spring that can fling the effluent on you and the end has a tend to whip if you pull it out too quickly. Anything stuck on the end of your snake might get flung at you. Use your imagination.
11. I like to run a hose down the drain AFTER it's been unblocked.

If you're on a septic system and the clog won't come out, your septic tank may be full.
Hope this helps. If you're afraid to do this yourself, my buddy or I will do it for a couple hundred dollars if you're in the High Desert. :-)

Monday, September 21, 2009

How to Sites

There are a number of places you can go for do-it-yourself (DIY) and home improvement ideas. Some are run by stores that want your business, and some are green and encourage you to recycle, and some just like to share ideas. I'm going to post links here from time to time, so please bookmark this entry of my blog and check back from time to time.
Commercial: (1)
True Value

Green: (0)

Handy: (0)

Tips for investing in Income Properties

Rismedia has a great article about investing in property in today's market. After you read the article, come back and read my comments.

1. Location is the number one rule of investing in real estate. Because the market for rentals in the suburbs of declining areas is contracting, it might be better to invest in cities that don't have much appreciation, but do have positive cashflow.

2. It's good to not go overboard, but as you're buying for the long term, buy long lasting components like ceramic tile, tiled baths and showers, and go with low cost granite countertops. If you are handy, these are fairly easy to install yourself and save a ton of money, plus the saws that you use for large tiles can be used on granite backsplashes. Here is a True Value project site.
If you use drop-in stainless steel sinks (get deep ones if your units are older and don't have dishwashers) you can use a 4" wet saw or grinder to make cuts in the granite. Bullnosed 8' granite slabs can be bought for around $100 and will last longer and look better than a $50 formica countertop. As an added bonus, it won't be hurt by cigarettes. If you start early in the morning, this is only a one or two day project; you can do it on the weekend.

3. Appreciation really depends on your market. California is always cyclical. Southern states, and the Northeast have cashflow without much appreciation. Flipping at this point can be done if you have a lot of cash and can find a really ugly fixer that noone else wants.

4. Historically properties have been appreciating faster than inflation. These days, much of the difference is eaten up in new fees and regulations by the local jurisdictions (Rental license, Code enforcement inspections and tickets, proposed Fire Marshall Inspections for smoke detectors) and public utility rates have been rising with public employee union wages, which rise even when the private economy is contracting. If you have lower income rentals you won't be able to pass these fees on, so avoid low income rentals. The government also competes directly against you with low income housing projects. (Remember #1)

5. Cash is best. While leverage is great, less debt is better. Just protect your assets with corporate structures and insurance. A dollar in your pocket is better than a $0.37 tax credit on your interest write-off.

6. Cost of ownership is a big one. See #4. What are the utility costs? If the utilities are not paid by the renter, can the utility company recoup from the owner ? In California, water bills go against the property. Are there MelloRoos or other bonds that increase the tax rate? Ask your agent.

7. It's amazing what can be done by ripping out nasty carpet (I'm a huge fan of laminate flooring, ceramic tile), scrubbing the walls, replacing the countertops (cabinets if necessary, but refinishing is cheaper and usually works), and upgrading some of the lighting fixtures (adding ceiling fans and outdoor lighting) for comfort and security.

8. Hiring of professionals is great if you can afford it. A lot of minor plumbing and electrical jobs would be prohibitively expensive if done by a professional. There are a lot of great how-to and DIY sites online, as well as books in the library for free advice. (Don't take a library book to a plumbing job). I don't like to kneel, so I hire some help for my flooring. If you're paying $40-80 per hour, you have to calculate how many hours you'll have to work to pay the professionals. If you have renters that want to move in, then you have to determine whether you or the professionals can get the job done on time. I've had it go both ways: professionals could do it faster, or pros didn't show up and the renter went elsewhere.

9. Always. Read some of my posts. I like background checks in addition to credit checks. I don't rent to anyone that I can't do checks on. All adults must be checked. All teens must go on the rental agreement once they turn 18. I just had a lady call and tell me that her husband has no papers and ask if that was a problem. Yes it is--do you want someone selling drugs or pimping out of your house? I had it happen once because I accepted a personal reference.

10. For about $350 you can do your own eviction in San Bernardino. For about $550 you can have a lawyer do it. Go with the lawyer. This could take 2-6 months in California.Or depending on your rent offer the person money to move out (as long as the place is clean and undamaged) as you just want to start earning money. Do not offer to give a good reference. Lying to other landlords will eventually ruin your reputation, maybe faster with new technology.

11. Lower densities tend to have better behaved populations. Once you get 5 units, you need a commercial loan (higher rates and less money could be taken out of a property) and you usually get an added inspection by the health department.

12. Absolutely. If you buy a rental in a resort location you can even right off trips to the area. Vegas market is down, so it's a good place to buy right now. I like Reno a bit better; it's close to the snow and is not entirely entertainment driven.

Friday, September 18, 2009

Invited Out to Rock Crawling

One of my clients called to see if I wanted to go out to Johnson Valley to go rock crawling. That was nice, but I'm a little busy today. Maybe next time. I do like offroading and have a 1986 Toyota 4runner. That's it above.

Fannie Mae Homepath Financing Hazards

This post is meant to be more informational than alarmist.

Many of the REO (repo) properties out there need some work. Fannie Mae has a site where they list some of their REOs for sale. The homes need varying degrees of work. Fannie Mae offers loan which have additional money for repairs. The difficulty comes from the way the loans are put together.

Here's the short version of where we are: Client makes an offer, we wait, we get a counter offer with an addendum by the bank, which we sign and send back. That's when things become a little different.

We got a verbal 'conditional acceptance' from the listing agent. So we are not in escrow, but now have to get estimates for any needed repairs. So now my client has to hire the various inspectors and see what is needed. Then we can get estimates.

The septic inspection turned up that we need a new seepage pit ($2000). The home inspection turned up a new roof, dryer venting, and some small electrical work. So now it becomes a little harder, because my client has to get estimates on all this from licensed general contractors. Here is where we start having problems.

A lot of contractors have left the High Desert area of California (and probably other areas as well--Our legislature is not friendly to business and the boom is over), so there are fewer contractors to choose from. The contractors out there, understandably, are reluctant to give estimates on houses that my client doesn't own. Then there is the fact that some who say they will come out and give an estimate never show up.

So now my client is looking at switching the type of Homepath loan he can get (the standard one gives up to $7000 for costs--this house just needed more) and use a credit card for repairs. He's doing this to get the $8000 first time buyer tax credit, which expires November 30, 2009.

Just a word to the wise.

Wednesday, September 16, 2009

More news of a prolonged housing dip.

As I've mentioned before, I think prices are likely to fall in California after the tax credit expires. There is a similar vein of thought in Britain as a forecasting group speculates that rich investors are causing the present uptick in prices.

More Real Estate Professionals pushing for extension of the tax credit

Here's the link:

Friday, September 11, 2009

A free picture viewer, resizer, etc. for Windows

Faststone. This was provided by some of my inspector friends. I haven't used it, yet, as I have other software, but I intend to.
For those of you who don't know, a resizer will allow you to decrease the resolution and/or size of you picture, which will allow it to be uploaded to sites faster.

Remembering the Fallen

Eight years after the terrible events of 9/11, remember those that were sacrificed on this day.

Thursday, September 10, 2009

The Ten Cannots

In 1916, a minister and outspoken advocate for liberty, William J. H. Boetcker, published a pamphlet entitled The Ten Cannots:

You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong.
You cannot help the poor man by destroying the rich.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away man's initiative and independence.
You cannot help small men by tearing down big men.
You cannot lift the wage earner by pulling down the wage payer.
You cannot keep out of trouble by spending more than your income.
You cannot establish security on borrowed money.
You cannot help men permanently by doing for them what they will not do for themselves.

An email I got minutes after the last post from

Expand and Extend the Homebuyer Tax Credit!

First and foremost, a thank you.  As part of the Fix Housing First coalition, you helped win the $8000 first time homebuyer tax credit in the stimulus bill last February. Without the collective voice of home buyers, homebuilders, realtors, suppliers, manufacturers, etc., this never would have happened. But now we come to you with good news and bad news.
First the good news: The tax credit is working. In addition to some positive numbers on increased sales and decreased inventories there is a bunch of anecdotal information as well. The only provision in the stimulus bill targeted directly at individuals, it is helping people realize the dream of home ownership. And, just as we had predicted, these benefits have spread to everyone connected to the housing sector - designers, manufacturers, realtors, etc.
Now the bad news: Unless Congress acts, the credit will expire on November 30 of this year. In our view, this will stop the housing recovery and slow the economy's momentum just as it is beginning. 
And so we will be asking you once again to help us convince Congress that the tax credit needs to be extended to September 30 of 2010 and expanded to include all buyers --not just first timers.  We'll be coming back to you with more information and requests for action in the coming weeks.
We are updating the website,, and encourage you to visit the site to view current information on how the tax credit is working. 
In the meantime, we have two requests:
1.     We want to hear your story. Congressmen and Senators have seen the reports on housing but they need to understand the personal stories of how the credit has helped individual American families. If you or anyone you know has used or benefited from the $8000 homebuyers tax credit, please let us know. Did you buy or sell a home? Did you hire more people as a result? Do you have a picture of yourself or your clients in front of their new home? Email us at; tell us your story - buyers, sellers, small businesses, movers, realtors, anyone connected with the housing sector. We will feature them on the website. Please include as many details as you'd like - as well as your zip code, so we can share these stories with your Member of Congress, to let them know it's working.
2.     Help get the word out. This coalition grew to almost 50,000 people who took action through the website last time. Please help spread the word about our new effort to friends, family, co-workers, neighbors, customers, suppliers, etc. You can also follow us on Twitter @FixHousingFirst.
Again, thank you.  We look forward to working with you again to extend and expand the home buyers' tax credit, and to continue to jumpstart the economy.

If you no longer wish to receive e-mail from us, please click here.

$8000 tax credit expires November 30, 2009--Move Up!

The $8000 tax credit for first time buyers will expire at the end of November. First time buyers are defined as people who haven't owned a home in the last 3 years. That means that there is only about three weeks to get your home under contract if you're going to close in time, and probably less as there will be a lot of pressure on all the loan underwriters toward the end of next month, though maybe they'll be given extra time like the 'cash for clunker' dealers were to complete the paperwork.
If you don't get done in this time, there is talk of extending the program. There is also talk of expanding the program to everyone, and possibly increasing the credit to $15,000. Should you wait?
Homes in the Victor Valley can still be bought for less than they cost to build. Interest rates are still low, but that isn't like to stay if the Fed keeps printing money. If we end up with 'Stagflation' of the 70's a $15,000 credit will make little difference once factored against a 12% mortgage. A $120,000 house payment would go from $720/mo to $1240/mo, so you'd be losing over $6000/year in payments.
As I've mentioned before, I still see prices trending downward. The $8000 tax credit may be erased by decreases in property prices, and a lower house payment save you the interest on the difference in price over 15-30 year loans.
I would still say it's a good time to buy, if you can get a better house than your rental for about the same monthly payment (or less). One of my clients is looking at moving up from a 875 sf duplex to a nearly 1700 sf house on .75 acre with 2 sheds, and mature landscaping with a sprinkler system for $100/month more than the rental.
It's a really good time to buy, especially if you are getting financing. If you've got cash, make a low offer and wait. If your credit and down payment need work you've got some time to get them in order before rising interest rates offset or exceed the drop in home value.

Wednesday, September 9, 2009

Get a Home Inspector

Here's a link to an article encouraging buyer's to get a home inspector lined up before the end of the year to capitalize on the $8000 tax credit. Unless you're a construction professional, with experience in the field, I can't emphasize enough, how important it is to get an inspection. I was a building inspector, and I found a bunch of things wrong with a property that my client and I have a conditional acceptance on, but the inspector pointed out that the dryer was being improperly vented to the attic.

More Good News for the High Desert

An article in the local newspaper:

International economist says High Desert can bounce back

Tuesday, September 8, 2009

Cash for Clunkers Analysis

I haven't checked the numbers but interesting.....also they (Gov't)
said it stimulated car sales which it did but much misleading info!!!!!

A vehicle that gets 15 mpg and does 12,000 miles per year, uses 800
gallons of gasoline
(Government definition of a Clunker)

  A vehicle that gets 25 mpg at 12,000 miles per year, uses 480 gallons
a year.

So, the average clunker transaction will reduce US gasoline consumption
by 320 gallons per year.

  About 700,000 vehicles were part of the Government's program, saving
224 million gallons per year.

That equates to just over 5 million barrels of oil.

5 million barrels of oil is about ¼ of one day of US consumption.

5 million barrels of oil costs about $350 million dollars at $75/bbl.

So we all contributed, through our taxes, over $3 billion... to save
$350 million.

They'll probably do a great job with Health Care though!
 This was forwarded to me in the email.
The rebates are taxable income, too.

I'm thinking of writing a book.

After 12 years as an investor, with some lessons learned from my parents experiences, I'm thinking of writing a book. I am trying to motivate myself. I have plenty of stories--especially about mistakes I have made--and I've made enough that I could weave a cautionary tale out of shredded income. Perhaps, something on "How to lose a million dollars in real estate" or "Handbook for throwing away money" and, yet landlording has done well for me, I just made plenty of mistakes along the way.

Monday, September 7, 2009

Cleaning Ovens for the ADHD

On this fine Labor Day, I was out at a rental, doing some last minute cleaning and organizing, and praying for a good renter. During the prepping, I opened the oven and realized we hadn't cleaned it, or finished cleaning it.
This blog is a little about cleaning and a little about time management. I'm also going to go out on a limb and say that, "if you don't have a cleaning service, they stronger partner should usually clean the oven," and this is usually going to be the man. I cleaned the oven fairly easily just using soap and water and bit of elbow grease.
I had oven cleaner at the unit, but didn't want to breathe the fumes, so I decided to experiment. I started by filling a sink with soapy water to soak the stove grates. I took a sponge with soapy water and squeezed it onto the oven door and surfaces and let the solution soak in for a bit while the sink was filling.During this time it's good to remove the oven door if you know how--it'll be easier to reach inside the oven.
I soaked a sponge in the soapy water and squeezed it onto the interior oven surfaces. I spread it out and let it soak for a bit. While it was soaking I went and cleaned some other surfaces and swept and vacuumed. Then I would return to the oven and use a green scrubby (Scotchbrite ) to break up the grease and crud. I'd soak up the nastiness, rinse under the kitchen faucet, then repeat my soak, clean something else for a while, come back and scrub routine. I did this about 5 times over an hour and got the oven usable.
I don't think I had to scrub that hard. I also didn't have to use any harsh chemicals. I just used a soap with a degreaser. If you want to use a harsher degreaser that's natural, white vinegar is good, but pungent. You can also use lemon juice. I was left with a nice lemony oven, and I got most of the rest of the house clean.

Getting (Human) Customer Service

Tired of automated call centers? Here's a link that gives the codes to get a human.

Thursday, September 3, 2009

Reply! Real Estate dot com Update

Finally, after a bunch lot more emails. I guess the lawyers letter helped.
Dear Client:
Thank you for your business. We enjoyed having you as a member. While we are sorry to lose you, we do hope you will consider us again should your business require lead generation in the future.

I also got a personal email from my customer service manager, but it was full of it, and I don't want to raise my blood pressure looking at it and rebutting it on a paragraph by paragraph basis. Most of it stems from the 'value' of their service and how it was presented by their sales staff.

One more reason to use me when buying REO's

I spent the last couple years as a building inspector. I know a lot of the contractors who are local. I know which ones tend to get things right the first time. I am also familiar with a lot of the pricing structures.
I just arranged for the septic, home, and termite inspections for my client. I got some of the lowest prices, and because I tend to repeat with the same people I got small discounts for my client. Many of the REO's are going to need work, and Fannie Mae and the FHA 203K loans require licensed contractors to do the work.
Contact me if you're in the market for an REO.

Wednesday, September 2, 2009

More Reply!

I've gotten another half dozen or so 'leads' with contact info that is either incorrect or belonging to people who are not interested in buying or selling property, or who don't meet the criteria I mentioned to the company when I signed up. So much for the one or two a week that I was told when they were usual--maybe this is just an anomaly.
From the attitude of the "customer service rep" (insert extreme sarcasm) I should probably be happy that I might, someday, be able to be of service to these "leads". It is not the fault of the people, they have to provide information to browse Reply!'s site. Then, if they have not been prudent and faked their input, they get contacted by professional subscribers who got duped into joining the site.
Reply! did not credit me for two of the other 'leads'. I've sent it on to my lawyer, and contacted the fraud department at my credit card company, so perhaps they'll sue me and I'll counter-sue them. We shall see.

Tuesday, September 1, 2009

Parts is Parts

Sometimes the upgrades on a house make it worthwhile. This is especially true when the housing market is down.
When the price per square foot is down, you're going to get more bang for your buck on a repo. I just saw a house with a $60K upgraded kitchen and a $5K in flooring, and another couple thousand in crown molding, sell for $50K more than a similar house down the street that had been a rental. I'm a handy guy, but kitchen remodels are notoriously laborious. They take a lot of time and usually a lot of money.  The house was basically on sale with a $17,000 discount. The other house also had rental grade lighting and bathroom fixtures. The difference in the houses had everything to do with how much the house was cared for and loved by the owners.
The difference in price, works out to about $300/month with today's interest rates. Sure, not everyone can afford the difference, and some people don't want the extra debt. When the market recovers, the house will be worth that much more, and be that much more attractive to a buyer.
There is money to be made when the parts are worth more than the whole. This is similar in concept to the corporate pirates of the 1980's did, and what salvage yards do on a regular basis. Find something where the pieces are worth more than the whole. Obviously, you're not going to split up the house. But, if you have similar house, with dissimilar prices, it might be worthwhile to estimate how much the upgrades would cost if you plan to make them in the future.

Good news for the High Desert

Evidently there's another project coming to the desert. It's a solar electricity generating station. You can read about it here.

Subsidized housing.

Over the last week, the subject of where prices for housing is going came up a lot. It was coupled with the increase in vacancies that I've seen in the rental market, both residential, and commercial.
Along with the conversations, I mentioned that the rental market is really competitive at the moment, and someone asked if I ever looked into subsidized housing, sometimes known as Section 8. I have looked into it, and decided not to get involved for several reasons. I'm going to tell you why.
Over the years, I had an opportunity to pick up some older duplexes in a low-income neighborhood. The units had few tenants, and some of the vacant units were emptied of the easily removable contents--doors, toilets, cabinet knobs, faucets, and compression plumbing under the sinks.
I started by renovating and renting the empty units. During this time, money was short, and I was working part-time and temp jobs during the day, and the units at night, and doing a variety of paperwork early in the morning. It wasn't unusual for me to be up at 5am and not in bed until somewhere between midnight and 2am. I would often get a nap at lunchtime, but I was doing a lot of 16 hour work days, 6 days a week, with a 'short' 8 to 12 hours on Sunday.
During this time I got a lot of people wandering by to ask when the unit would be ready. I had several ask me if I took Section 8. I was fairly new to the business, and told them I hadn't looked into it. When asked, I told them the rents were about $650 and nearly all of them told me that Section 8 would pay me $850 and that we could "split the difference" or something to that effect. That sort of dishonesty helped put me off. Well, I guess they were honest with me, but not with Section 8. I have an abiding antipathy to liars. However, I would give them an application if they wanted.
I  also was questioned as to why I was making the places 'so nice' by applicants. I replied, "If it looks like a sty, only pigs will want to live here." Those people never brought back the application I gave them. In the words of Dave Ramsey, broke is a condition, poor is an attitude.
Emotionally (I know I shouldn't get emotional about property--that's fodder for another article) I am a bit attached to these properties that I've spent so much time renovating. I've spent a lot of time and money, and literally blood, sweat and tears on these units. All of the landlords who do their own work that I've talked to, feel pretty much the same. All of them that have had Section 8 renters have had problems with damage to the units. The overall conclusion is that the extra money is eaten up in the repairs.
As it happens, the local paper had a trio of staff writers cover the subject. In my opinion, the comments section will give you better insight than the article itself.
Though Section 8 pays higher than average rates, there is a flipside with subsidized housing (brought up by one of the above commentators) in that it devalues real estate in the area. The people building subsidized housing  are able to charge rents that are lower than market rates (affordable). This brings down the rents of neighboring units, especially, or maybe because of, the added units cause a surplus of housing. This drives the rental housing prices down. So the government causes taxpayers to  subsidize a few large construction companies that are in competition with them.
The purpose of the subsidized low-income housing is to deflate housing prices. This unfortunately for investors, also deflates the value of their property. So it's likely, that in the near future, as bailout money gets used for subsidized housing, it will accelerate the decrease in your investment's value. Your property will become worth less faster. This is going to be especially true in larger cities.
If you drive around neighborhoods or down the freeway, you're likely to see a lot of commercial property vacancies. There are more coming. As rents go down, commercial properties are worth less. Unfortunately for small business owners, there is a lot of uncertainty as to what new taxes are in store for them and what existing taxes are going to be raised. That economic uncertainty is going to contribute to unemployment. So there are going to be less Americans compteting for housing in California.
All this makes me think housing hasn't bottomed out yet. This is especially true in outlying areas and suburbs. Though, prices are still at lows that I haven't seen since the 90's, and you can pick up housing for less than it costs to build, and less than it would cost to rent. It still might be good to buy, knowing that your purchase will lose value over the next few years, then increase after positive changes in the economy.

Saturday, August 29, 2009

End of the month, and bank holidays

Just a friendly word of advice to anyone reading this. I've said this before, but it bears repeating. If you haven't heard about an offer by Friday afternoon, you're not going to. You're not likely to hear on Monday either--the asset managers are dealing with the pile of paperwork on their desk that the listing agent has forwarded to them, after it piled up on his or her desk over the weekend.
If you haven't heard about your offer and it's within three business days of the end of the month, you're not likely to get an answer. Everyone is trying to close the deal before the end of the month to avoid recalculating property taxes for the escrow impound account.
While your offer is really important to your agent, the other people in the transaction chain, might have different priorities, at least at these particular times. I, and any agent getting paid on a commission (almost all of us) will definitely let you know if there has been a counter-offer, rejection, or acceptance. It's in our financial interest to do so.
It's August 29, and Saturday, enjoy your weekend.

Friday, August 28, 2009

Lease-option or Rent to own

In a rent-to-own (commonly called a lease-option) there are two separate agreements that you are going to enter. One is the lease. The second is the 'option to purchase' or 'option to buy'.

Generally, people who want to rent to own have poor credit, or unverifiable income. They are often self employed. Lease-options are also used by real estate investors, as there are new caps on the number of conventional mortgages an investor may have at any given time.

The lease, is generally a typical lease, which will spell out the responsibilities and rights of both parties. Typically, the lease conditions will reference the 'option' and all conditions of the lease must be adhered to for the 'option' to be exercised. The lease will generally have the right to renew the lease a certain number of times (a lease in CA can only be for one year, so generally people need more than one year to fix their credit and get a down payment)

Often, there is no 'security deposit' for the lease. You only have the monthly payment. As the intention is to transfer the property to the lessee (renter), most agreements require the lessee to take care of all repairs and maintenance, though many lessors will guarantee the property for a period of three to six months. The upside is that you're also allowed to paint and decorate the house in any manner you see fit. In fact, most agreements allow you to do anything that improves the property.

The 'option' is generally purchased from the lessor. This amount will typically be greater than the amount of a security deposit, but less than the cost of a typical down payment and closing costs on a purchase, but will also may be influenced by your credit history--typically $5000-25000. The 'option' money is usually credited to the purchase price once you buy the property. If you fail to abide by the lease agreement, you are not entitled to any of this money back.

Typically, a certain portion of the monthly rent will be credited to your down payment. This is completely negotiable by both parties.

Depending on who you are dealing with, you might be able to trade something valuable instead of cash. Examples include, but are not limited to: vehicles, jewelry, collectibles, or tools. It's entirely between the parties. The parties would have to agree to the monetary value of the items to be credited to the down payment.

Once your credit has improved to the point where you can obtain financing, and you have acquired the necessary down payment (through saving or accumulating the necessary credit through your 'option money' and your monthly payment) you can exercise your option. You and the seller enter into escrow and after completing escrow, you own the home.

That's generally how it works. Specifics vary from agreement to agreement. You should only enter into an agreement which you are certain you can complete in the time allotted by your lease and the number of renewals, though some sellers will allow you to re-up your agreement with additional payments.

Backwoods Home Magazine

I fond this site while using Stumble Upon. It's great
This is a great online magazine with recipes, gardening tips, articles on all sorts of self-reliance. August 2009 issue has an in-depth look at identity theft.

Thursday, August 27, 2009

More on Reply Real Estate

This is a post from 6 days ago (August 21, 2009) from an allegedly former employee.

Reply Real Estate is definitely a SCAM. I had the misfortune of working there for a week at the San Ramon, CA office and wished that I had found this blog before accepting the job. I had interviewed for the position of Regional Sales Executive that was advertised on but, after the three days of sales training, the job turned out to be nothing more than a boiler room style of “high pressure” telemarketing. We were forced to make over 100 phone calls per day and were threatened to lose our jobs if no sales were made. We were encouraged to do what it took, to close a deal. The veteran employees that obviously bought into this SCAM were professional liars. If anyone is considering a career with Reply Real Estate, please take my advice and stay away.
 This post can be found here:

Why you should do your due diligence on companies.

Obviously, I've have made a mistake by getting involved with

I should have Googled them while on the phone. There are plenty of sites with complaints about the service that are in the same vein as my own. The seem to be kept in business with infusions of venture capital and gullible folks like me.

Here are some links:

Rip Off Report: Reply Real Estate Avoid this company! San Ramon ... -

My Experience with

August 29 Note: Any information is regarding people is bogus (what they entered on the site to protect their privacy)

So yesterday I signed up for some real estate lead generation and has a provision to send back (not be charged) for leads that are supposedly 'prescreened' for people looking for a house in my area. I got 3 'leads' withing the first 16 hours. 3 leads is the amount they can start to bill you for ($54.95/each) and all of them had problems. I had to go through the motions of trying to contact telephone and email to verify, then send them to the customer service department of
I also sent them a cancellation email and called to my representative. She did not call me back. Instead some high pressure salesman called back telling me it was all a numbers game and as long as I kept sending back the 'bad' leads (100% so far) I wouldn't get billed for them. He offered all sorts of incentives, but was unwilling to let me out of something I'd begun a mere 24 hours earlier. I got all the usual jargon about how valuable their leads would be, and that on average, agents 'only' paid for 10 leads ($549.50) per closed transaction, which in this area can be more than 1/2 my commission (generally you pay 25-33% for a successful lead).

In today's REO and short sale market, you're not even likely to see a commission for 3-4 months, but these guys will already have your money.

Here's a copy of the letter I wrote:
Yesterday when I spoke with your salesman on the phone he misrepresented your company and said that you prescreened your leads and had qualified buyers. It is obvious from looking at some of the first 2 emails that I received, that you don't screen your 'referrals' and that you don't qualify them before you forward them on to me. I have contacted my credit card company's fraud department.

The first emailed lead was from someone with 'poor' credit looking for a home from $1,000,000 to $1,250,000 in an area that has mostly $100,000 homes. He also gave me his wife's phone number. I spoke with her and emailed him, but she seemed surprised by my call, and implied that her husband was at home 'messing' around with the computer.
Prospect No: 311597
Please contact this potential client as soon as possible.
Prospect Contact Information:
Prospect Type: Buyer
E. Aguila
 Best time to Contact:Evening
PH#DELETED 8/26/2009 6:15:41 PM
The second lead was the most obvious example that your company does nothing resembling 'screening' of applicants who fill out the forms on your site. Like the others, I'll post it here for you to read. You'll notice his email address is probably not even available, as it probably would have been used in-house by the ISP before opening. His name is suspect. He's claiming to be a 'seller' but does not even seem to know the square footage of his house. I did email him, but got an error from the email server. His phone number is a Michigan area code and it's a non-working number at a medical center.

Prospect No: 311664
Please contact this potential client as soon as possible.
Prospect Contact Information:
Prospect Type: Seller
J. Smith

Best time to Contact:
(989) 321-4563 8/26/2009 10:05:02 PM
Prospect Details:
Property Type:

Single Family Home
Location: Hesperia, CA 92345
Price Range:

$100,000.00 - $124,999.00
Square Footage: Any
Bedrooms/Bathrooms: 3 bd / 2 bath
Sell Timeframe: 3 - 6 Months

Error message from email to 2nd 'lead':

Delivery to the following recipient failed permanently:

Technical details of permanent failure:
Google tried to deliver your message, but it was rejected by the recipient domain. We recommend contacting the other email provider for further information about the cause of this error. The error that the other server returned was: 550 550 Requested action not taken: mailbox unavailable (state 14).

From the 3rd Lead:
Notice his online identity does not match his name, and I've included his email (which I'm keeping for future reference)
Prospect No: 311695
Please contact this potential client as soon as possible.
Prospect Contact Information:
Prospect Type: Buyer
Best time to Contact:
PH# DELETED FOR CONTACT 8/27/2009 7:08:17 AM

From the 'lead':
Reply is bogus web site. I HAD to register to view bank forclosures only to be offered a real estate loan without any links to forclosures. This is just another gimmick to sell loans. Quit wasting my time, why would I want a loan without a potential to FIND a home. I think that’s called Bait and Switch. Thanks for nothing. Don't bother to contact me again.

Your company might provide something of value, but that seems to be more a matter of happenstance, then by any service you actually provide. I want you to immediately cancel my contract and immediately reverse any charges you have made to my credit card. Failure to do so will result in legal action, and I reserve the right to publish my experiences with your company.

Thank you for your cooperation. If you have any questions you may email me, or call me at 760 887 2284.
James C. Foy
All Cities Realty, Inc.

Monday, August 24, 2009

Moving 101

As a real estate agent, landlord, person who likes to travel, and former member of the military, I know a few things about moving. This post is to give you a little advice on how to move. The advice is free, hopefully it's worth more than the price. If you can afford to hire movers to pack and move everything to your new location, you can skip this piece.

If you are thinking about selling your house, or vacating your rental now is the time to decide what you really need. This gives you an opportunity to downsize all of the 'stuff' you've been collecting. You will also save your (and the people you con into helping you) back when moving day comes. Moving day comes a lot faster than you think, and you have WAY more stuff than you think.

The first step is to sort your stuff into three piles of 'keep','toss', and 'not sure'. These are self-explanatory.

Advice for the 'keep' pile. This is all the stuff you pack immediately except for the stuff you need for day-to-day life, like food and toiletries, and whichever electronic devices you must have like your cell and laptop or business computer. All the family memorabilia, pictures, favorite china, silver, art work, jewelry, and furniture. For sellers, anything you are not using to stage your home.

Homemakers, I suggest you make meals with whatever you have in the house, and work towards, having a few boxes of mac'n'cheese, or pasta, or something simple for the first few days in the new location. Pack away all the dishes you want to keep, and serve on paper plates or plates you plan on putting in the toss pile. Start using plastic cups from Del Taco and commuter mugs for coffee that you're just going to put in the car when you leave anyway.

The 'LAST & FIRST' box: This is the last thing to get loaded into your vehicle and the first thing out. It has toiletries, some easy to prepare food (possibly in ready to eat out of containers and some utensils), can opener, coffee maker, alarm clock, some towels, makeup for the ladies. This contains everything you need to setup base camp in your new location. Once this stuff is unpacked and set up, you can more easily keep moving with the rest of the unpacking. These items are the last to be packed, but should be some of the first to be identified and planned for.

So you will have to store three things. The 'keep' pile, the FIRST & LAST box(es), and food, clothes, and toiletries. Hopefully you can store them in your garage or a shed. Furniture can be stored in the house. There is also the option of commercial self-storage. Keep two things in mind. They charge by the size of the room, so the less you store, the more you save. Most people intend to store for a couple months, but the average stay is about six. My uncle ended up using a small storage space for two years due to health problems and spent $1800 instead of the $150 he intended.

The 'toss' pile is everything you don't need or want to move. Most of the stuff you own will probably cost more to move and store than it would cost to sell and replace. Things in the 'toss' pile can be sold, donated, or given away. Used items,for the most part, lose a notorious amount of value.I have a few suggestions.

Want to keep your kids artwork? How about scanning it into your computer? Then you won't end up with an attic/basement/closet full of paperwork in the future. If you have a scanner with a document feeder you can scan up to 50 pieces at a time. Some will obviously need a flatbed scanner. This will also allow the paper to be put in the recycle container and might save a few trees.

Do you really need them? Think long and hard on this. Think especially long and hard about anything fragile. If your Capo di Monti or Belleek porcelain breaks in transit, will it be worth it. Luckily, there are plenty of types of packaging and cushioning available, much of it free or cheap on

If you don't have the original packaging for TV's, or old CRT monitors, they are not likely to travel well. Additionally, they are heavy, and are cheap to buy and sell used. You might also use this time to sell the unwanted and upgrade to a used flat screen at your destination. Additionally, if you have a flat screen and are changing elevation, it might be better to get a screen that at that altitude. As we all have experience, the continuing march of technology makes it cheaper every month, so the sooner you sell your old stuff, the more it will be worth. And you really don't need that Commodore 64 anymore.

Some of your friends and family will help you move. This is the time to listen carefully for them to admire anything you aren't sure you want. Give it to them. You can always visit it later (as long as you're still friends). Your friend will be ecstatic, and that will be one more thing you don't have to move.

If you know you're going to sell something, give your friends first crack at it if you need the money. Otherwise, give it away, or trade for help with the move.

Charities can be any of several varieties. There are thrift shops, churches, homeless shelters, public and private schools (have 500 pens from your bankrupt business?), political causes, etc. Just about anything you can think of has some sort of charitable establishment.
In these tough economic times, donations to charity are down. This may be the place to bring everything you couldn't sell,and get a tax break. If you couldn't sell it for a dime at a garage sale, it's probably not worth moving. Don't bring them trash, no one wants the couch that is torn up and smells of pet urine.

Price your items reasonably. Most items are worth a dime for a dollar. Think of it as someone paying you to move your stuff. Give bulk discounts. If you call it a moving sale, people will know you don't want to move it, so will make lowball offers accordingly--haven't used that exercise equipment in six months? Take what they offer, you weren't using it anyway. Sell your more valuable items at any of the free online advertising sites.

Packing is always problematic. Organizing will help minimize the difficulties. I've already mentioned the LAST & FIRST box. Some people like to organize by bedroom and that's good. I have another suggestion, that can be used as a stand-alone method, or in combination with other methods.

Label your boxes with a letter number combination. You could use 'K1' for 'kitchen 1' or 'J4' for "James' 4". The important thing to do is use your word processor to keep track of the contents. Most word processors have a "find" feature. So, if you use the box designations as paragraph headers, and type a list of items in each box, you are able to use the "find" function of the word processor to find any item you want, without having to write on the boxes, or tape lists to the boxes.

If you've labeled things as I've suggested, and you have a laptop computer, your move will be SO much easier. Even if you don't have the electricity on, you can whip out your laptop and start unpacking. After you get the boxes dropped into their respective rooms, you can start unpacking, and use the laptop to find anything you find an immediate need for.

Hope this helps. I plan to blog about packing your truck next time.

Saturday, August 22, 2009

Some thoughts on housing, both buying and renting

Two articles from RISMedia this week have highlighted the fact that prices are at some of the lowest prices in nearly 20 years, and that the affordability index is 67%. This comes as no surprise. Here in the High Desert, in California, it is still possible to buy a house for less than the construction costs.

The good news, is there is continuing commercial and industrial development here, despite some problems caused by local government overextending themselves financially (like most levels of government during the tech and real estate bubbles). The City of Hesperia has just been named an enterprise zone.

Due to Governor Schwarzenneggar's moratorium on foreclosures, I've seen a slight upward trend in the prices in the Victor Valley, as supply of houses on the market is causing an increase in bidding on the houses. I think prices are likely to drop again as there is another wave of foreclosures on the horizon in California. This is going to be exacerbated by small business people deciding to leave this highly regulated and taxed state, even if they have to walk away from their homes.

The affordability of houses has caused quite a bit of competition. First time buyers are competing for houses, with small and large investors. My wife and I had a small house in escrow, but the house wouldn't appraise, so I'm sure an investor with cash will buy it. I could go look up the sales price at the county recorder or online, but I don't want to aggravate myself.

I have seen a trend toward lower rents. Many rental owners are advertising move-in specials. I see family members moving in with each other. I have seen people leaving the area, some to be nearer the larger metropolitan areas, some to leave the state, a few to leave the country.

There is a push for more government subsidized, low-income housing (projects), which will lower rents as landlords compete with the government subsidized landlords.

Some of these landlords are likely to find the competition too fierce and add more units to the market place through sale or foreclosure, which will reduce rents further. It is a question of where the market will bottom out on the government induced spiral. Look to the subsidized unit costs, and the features to set your prices. It may be more important to keep a good renter than make a profit. This is a typical of what happens when the government starts competing in the private sector.

Thursday, August 20, 2009

Renters, Sympathy, and Media

I recently was reading a local newspaper article about the closure of a complex of low income housing. The place definitely had problems. However, they interviewed one of my former renters and portrayed her very sympathetically.

That renter and I had come to an agreement with me regarding our mutual need for her and her family to move out. She owed me money. She had a history of falling behind and catching up, but her behavior had become erratic, and her husband was no longer working. She 'fell' at work and had a black eye. The list goes on.

She moved out peacefully enough and we avoided the eviction process. She moved from a 3 bedroom duplex to what I heard was a 1 bedroom apartment and went from a rent of $660 to an alleged rent of $575.

I was left with a place that required a remodel. She hadn't vacuumed in the 3 years she was there. She had dogs, and several children who weren't much help around the house (along with the husband).

So Below are some examples of the move-out pictures. The first is the layer of grease caked on top of the stove hood, along with the 4" putty knife I was using to scrape it off.

The next photo is a picture of the stove knows and the underside. The stove knobs and front were scrubbed with cleanser until most of the lettering came off. The underside and burners hadn't been cleaned at all. In fact, grease had accumulated to the bottom of the burners. I cleaned much of it out by hand, then took the stove to a car wash and spent $15 in quarters with a high pressure grease remover and still didn't get it all off. I ended up scrapping the stove along with a broken washing machine that got left behind.
Then there's the broken toilet and the scraped up linoleum in the kitchen. Some broken electronics and windows were also left behind. I haven't determined whether I actually came out ahead after 3 years of renting, as it cost me a few thousand to remodel and repair, and she was a few months behind by the time she left.

This is, perhaps, nothing more than a warning for those who are sympathetic to a sob story. Most of the twelve years I've been a landlord have shown that most people with a really long run of "bad luck" have been the cause of it. I have quite a few more pictures, as I photograph or video all move-outs, but those can wait for another post. This was salient due to the nature of the article I read. These are not the worst move-outs I have cleaned out. I have myself to blame on most of them, poor management skills on my part.