Friday, July 2, 2010

Ok. Actually I'm waiting for some non-paying renters to remove the last of their belongings and give me back the keys. But, If they show up, that will save me (and them in the long run) the legal fees.
Today, I've been working on updating rental agreements to include fees for serving notices on tenants. This is because I had to serve the above mentioned people in a city 50 miles away. I had to make 3 trips. So I'm not going to take that one in the shorts again.
I've also been working on a new "Disposition of Security Deposit" form, so that I can comply with the law. Remember, you have 21 days in CA to mail one of these out.
Happy 4th of July to you all. Remember all of the Patriots who have sacrificed fortune, wellness, and life in order to give us this great country.
If you wish to read my political ramblings, check out
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Sunday, June 27, 2010

Still Working on the Garden

As you can see, I got that spa back to my house. I was also given 7 more tires for the wall.
Unfortunately, I didn't get the pump for the spa, but did get the heater unit. I don't know what I'm going to do with the heater, but the spa is getting turned into a raised garden area.
It's big enough for a fruit tree, so I may do that. It has eye bolts on the base for moving the spa and these may prove useful if I ever have to net or put plastic over the tree. That will still give me room for flowers or food crops around the base of the tree.
Now I just need to set it down and make sure the drain hole is unplugged so that excess water doesn't accumulate.
I also got some dirt into the bottom row of tires. They are mostly truck tires--16's and 30's.
After I put the dirt in I ran a hose out and started compacting the dirt and filling the voids in the tires.
The soil out here has a lot of powdery clay. It's going to make quite a formidable wall.
 On the left, I have the hose trickling water into the tires. I'm using rebar and and a hoe to move the slurry of mud into the voids. I don't know if you can tell but the voids use about half the dirt, so I'm going to be bringing more in on a continuous basis.

It's been hot today, so I was out with the large straw hat, and gloves because the rebar gets hot in the sun.
 I'm hoping the amount of clay in the soil will make for a good semi-finished surface at the form boards.

As you can see, I still have more tires. That is probably not enough to complete the wall, but it will be enough to get the wall of tires done a few feet out from the block wall in the background.
I did notice a low flow in the garden hose out this far. This will be OK for drip irrigation, but I may need to put a booster on my well.

Monday, June 21, 2010

Gardening Part Deux

On this first day of summer, I spent the majority of the day doing more gardening prep work. I will be using a lot of materials that I have on hand. Most were picked up second hand--much of it free or at little cost. For example, I arranged to remove a spa out of someone's backyard. It has no heater, so few people want it. I want to use the spa as a raised garden bed, and can use the pump for the fish pond I want to grow.

In the picture above you can see the remnants of a couple of Chinese Elm trees that I removed. I'll have to keep an eye out for shoots popping up around the yard again. It's about 95' from the block wall to the back of that garage. I plan to make the garden about 60' off the back wall, which will allow me access to the septic system and should give me enough room to eventually put a gray water tank in.
Here you can see a smaller amount of tires. I took this picture toward the end of the day. In the lower left corner is the manual tire changing machine. I've had that for years and it's bolted down to the slab. The machine on the right, is a pneumatic tire changer that I picked up at the swap meet, and it's good for breaking the tires loose from the rim, but doesn't remove the tire very well. It's also not bolted down to the slab, yet. We ran an air hose from the garage to the wall, then behind the other stuff. You can see the air hose dropping off the back of the 1965 Ford Flatbed. In the lower right hand corner is a solar water heating panel.
My buddy, Steve, and I set up to removing tires. I would work the pneumatic changer, because I've worked in garages before, and I didn't want to take chances with him getting hurt/losing a finger. He provided the brute force for pulling the tires off. On a few of the larger tires we used my Bobcat to loosen the tire from the rim. Then we took the tires over by the wall and unit and sorted them by size.
Here is most of the tires we got done today. Not very many, but we moved quite a bit of stuff around, as well. So I don't feel to bad. If you look to the right of the line of tires you can see the air hose. I climbed from the cinder block to the top of the block wall and walked the hose back behind everything so that I can still maneuver the Bobcat and other vehicles back here.
The plan is to stack tires until they are about the same height as the block wall, filling each layer with soil to keep them in place. Then I can plant stuff in the terraced tires. I'm thinking herbs or some sort of ground cover or flower that keeps bugs away. A wall of color would be nice there. I'm also contemplating painting them white to keep the temperature of the soil down. I've read that a problem with raised beds, especially with all that black to absorb heat.
Just to the left of the lined up tires you can barely make out some grating.
Here is the grating. I have a bad problem with gophers on this property so I'm laying down the grating to help protect the crops. They aren't tight to the wall, because there's a cement footing there. I've slid the one under the tire. I picked up the grating from a walk-in refrigerator I was asked to remove. I plan on using the glass doors from the walk-in as part of my green house.
Happy Summer!

Monday, June 7, 2010

More Gardening Stuff

This is the view from near the detached garage. There, behind the cars, is a block wall. I want to put a raised bed against the wall to grow tomatoes and (something). The boarded up building to the right (west) is a 6 unit apartment complex that I've run out of money to finish at the  moment.

Obviously I'll have to move the cars. I'm thinking about taking the tires off the rims and building a wall 20' out from the apartments. I am thinking about 5' tall and terraces toward the east in order to plant an herb garden on the east and maybe something decorative on top. I think I'll either paint the side that faces the apartments or cover them with mesh and stucco that side. I happen to have a lot of paint given to my partner by his cousin who was a superintendent for a housing tract.

I've also gotten in touch with a local horse rescue shelter. So I'm able to get horse manure. It has a real high pH (8.5) but can be composted. It could also be mixed with the caliche on my property and made into adobe. How cool would that be?

For those of you who are vehicle buffs, from left to right: 65 Ford 1T flatbed, 70 GMC 3/4T with a working factory tachometer and 402 cid engine (needs rebuild), 1978 Propane power Toyota, 1967 Daimler Saloon.
This is the back of my garage and workshop. The evaporative cooler is up and working, which is good, because it's been over 100 for the last 3 days. I've replace a lot of toilets over the years. The wife insists that I don't use them as pottery. I may rebuild them with the cost of ceramics going up. It mostly involves removing calcium deposits. I also knocked down the weeds with a string trimmer today.
I plan to stucco the garage at some point, but materials alone are close to $2000.
You can't see it, but there is a water line by the evaporative cooler that I'll tap off of for my water line.
Here is a closer view of my southern bounds for the garden. I'm standing near a 10' wide chain link gate. It's six feet high.
In the foreground are a couple of solar water heaters and a heat exchanging tank. I left a helper unsupervised and he rolled it to the recycling trailer. I don't know if it's any good anymore.
Yes, more tires.
Under the tires and solar water heaters is a cement slab. I may use this area for a chicken coop or ????

In the foto to the left, I'm standing behind the orange Toyota truck. This is the back wall. As I said earlier, I later knocked down some of the weeds.
This picture reminds me that I need to install a back panel for the shell on the GMC and a carpet kit.

I turned to the left 90 degrees (now facing north). You can see the boarded up windows on the apartments and the garage, and a Chinese elm tree. The elm has been very stubborn, as has the acacia about 30' behind it that you can't see.
I'd like to start more acacias as they have horrific thorns every 3-5". I think they and the cactus will make great security.
You can also see the propane tank in the back of the Toyota.
If you look to the right of the door stoops you can see a depression that is the trench for the water and gas piping. At the back you can see the wooden fence. It was also recycled from a job where the contractor was happy to drop it off at my house rather than pay the dump fees. He was putting up a block wall.
Now I'm standing to the west of my garage. The utility trench is more clearly visible. You can also see the acacia.
The acacia was over 30' tall, but seemed half dead. After cutting it down, suckers started popping up all over. We removed several from the trench on the right. Some of them were covering a beehive in the block apartments. I couldn't find anyone to remove them so, sadly, I had them exterminated. I feel horrible about that, as my great grandfather was a beekeeper.

I'm hoping to lay out a few raised beds and 6 to 10 fruit trees in this space. I have to contend with gophers. I'm going to get 1/2" hardware cloth for the trees and have some used shelf racking from a walk-in refrigerator to put at the bottom of the raised beds. I've been told I should by a couple king snakes for hunting gophers, but I think that would interfere with chickens and rabbits in the future.

Feel free to comment, just don't tell me how bad the building looks. I know, trust me, I know.

Gardening and stuff.

I haven't posted in a while. I had the flooring to redo in the mobile home and have that listed up for sale. Right after I got the flooring in, someone threw a rock and broke a window, so I had some really nice infrared cameras installed along with a multiplexer. So now the mobile home has a professional security system, as well. The work was done by Sam Moose at New Age Systems.
In the mean time I've been developing my skills gardening. I'm looking at plant types, pH levels, composting, gopher guard for trees, and putting in some raised garden beds. I'm even thinking of doing a terrace with some of the used tires I've acquired. You might be surprised how many with rentals, or maybe not. With small growing areas, I thought I'd use them for a wall on one side, and small herb gardens in the exposed soil.
So I need to get an empty 5 gallon bucket for my local coffee shop so they can save me coffee grounds. Then I'll measure the pH of the grounds and see how I need to modify the soil.
I have to move some trucks I have parked against the old back wall. I want to use the wall to shelter tomato plants from the wind.
I need to learn to plant more densely. So I'm looking at planting shallow and deep rooting plants next to each other, but I have a lot of work to do prepping the beds.
I just wanted to write a little something for now. I'll try to keep things updated with some pictures in the near future.

Tuesday, April 13, 2010

More rearranging the home office and submitting a commercial offer

So today consisted of running over to a clients place of business and having him sign an offer on a restaurant going into foreclosure across town.

The lender plans on foreclosing on Thursday, so my client made what he thinks is a high offer, though I doubt the lender will be happy with it. I've been saying we're heading for a commercial crash, and mentioned the stagnant commercial market, so I'm hoping for a counter offer, at best. If we don't get anything, we'll just wait and see if it comes up again at a better price. I'd like to be more hopeful, but I think a lot of lenders are too optimistic about the commercial market, or too stubborn to take a small loss now, in order to take a bigger loss later. Maybe the lender is hoping to make another loan on the property in order to foreclose a second time.
The location is on outer Hwy 18, so a little hard to get to for travellers, but it is close to the post office. We could use a place for a good cup of drive-thru coffee over there.

I also spoke with a businessman and his wife (businesscouple ?) about the value of the building they were leasing with an option to buy. Hopefully I'm making friends. Their building is old and needs a lot of work to bring it up to current codes, as is the attached SFR, but their credit isn't the best, so maybe they can work something out with the owner. IMO, the owner wants way too much.

Still working on the home office. Had to get some round cable staples for the power cords. Just about have things set up in an acceptable manner. Older places never have enough electrical receptacles. When I get my dream house built, it's going to have lots of places to plug the stuff in...if I don't go all mad scientist and power the place with a Tesla coil.

Tomorrow is time to meet an inspector and potential renters.

Monday, April 12, 2010

New Computers and technology stuff

So, I'm still getting settled in after the move in February. There's much arranging and rearranging of the home office space. My boss, is even talking of expanding, and possibly opening an office in the High Desert.

In the midst of all this, I've gotten a new computer. I'm setting it up to run Linux Mint. My subscription to WinForms is about to expire, so I'm moving over to a membership with which has great articles and real estate forms for about one quarter the WinForms price.

So there have been quite a few late nights messing with technology. My PDA wouldn't sync, so I reset it and lost some contact info. Everything seemed fine, but now it's temperamental again. I set up a digital picture frame for my grandma. Now I'll need to use my old computer parts to build something for her to scan in the old family photos, and type up some memoirs.

So, I still need to get the network printer to work with Linux, though I have a friend who'll help me "when he gets the time". LOL, we're all so busy these days.

Meanwhile, I'm helping a couple friends with their rentals, and have gotten all my California rentals filled. It's now time to get some of the back rent owed with the help of income tax returns. When I had empty rentals and no qualified applicants, half rent was better than no rent. Now it's time to get people caught up, catching up, or packing up.

Basically the last half of March, was a lot of property preparation, and some pre-summer maintenance.

There have been several articles out there on more price drops in the future, and I'm submitting an offer on a commercial property tomorrow.

I went to the International Code Council meeting in Victorville last Wednesday. The discussion hinged on home health care facilities. I was torn between it and the Mojave Water Agency meeting on gray water use, but a friend attended that. Unfortunately, she hasn't been feeling well, and left early.

I'll be going to Las Vegas this weekend for a professional leadership seminar. I'll also get to see some friends. After that, I'll come home for a few days, then I'm off to Colorado Springs to tidy up a house up there for sale.

Tuesday, March 30, 2010

Good news for buyers and investors! There's another dip in pricing coming.

If you've seen any of my answers to questions in the past, you've probably thought I'm pretty pessimistic on real estate. I'm not pessimistic so much as realistic on where things are headed. Over the last year or so, I've spoken with numerous people who were in trouble with their mortgages, and the banks hadn't bothered to foreclose on them, some for more than a year in default. I'd spoken with enough people that I knew there was a second round of foreclosures in the offing, and that the various government incentives were there to prop the prices of real estate up.

Why would the government want that? It would keep money in the banks, and allow for higher property taxes. As usual, follow the money.
Other than in Southern California, prices have been dipping. California is coming next.

Read this article from the NYT
Can't believe it's been more than a month since I last posted.
Since then I was given back a mobile home that I was carrying paper on, finished moving (but not unpacking), visited relatives in Arizona, changed the timing belt and spark plugs in my Honda Element, had the transmission go out in my old MB grease burner, and some transmission problems occur in my old 4x4 4runner, closed an escrow for a client after 6 months of short sale purgatory,  and dealt with the wife's health problems. It's been so busy and I have so much more to say.
My boss is also thinking of opening offices in the High Desert, Las Vegas, and La Paz Mexico. I'm game for anything at this point.

Saturday, February 20, 2010

Are there more desirable areas of the Victor Valley?

I answered this question on late December of 2009:

This is a fairly complicated question. I have a client from out of the area who is looking to invest and he's asked me a similar question. While the Victor Valley has been occupied for 100 years, most of the growth has been in the last ten. Many larger cities have found it economically feasible to house parolees in the area, including some of the nicer areas. Many investors bought homes in nice areas in order to house Section 8 rentals. This has made even nice areas a mixed bag. There are nice neighborhoods scattered throughout the valley, but there are a complicated set of factors that will help you decide what is most appropriate for you.

Some of the factors you should consider: Who is the occupant (you or someone else)? What is the health of the occupant? Does the occupant commute? Will there be children in the house (which public school will they be in, or are you willing to pay for private school, or home school)? How much privacy does the occupancy like? Do you need park an RV at home?

This really depends on what you want to do and where you will be spending your time. If you're a commuter, and don't want to spend an extra 30 minutes on the road every day, you should consider Oak Hills or Summit Valley. They are rural, yet close to the freeway, and don't have the congestion problems that exist along Main St., Bear Valley Rd., and Hwy 18.

You will have further drives then if you lived in town, but time-wise, they won't end up much longer because you're not spending as much time in slow moving traffic. This is also less time breathing exhaust fumes, so if you have respiratory problems this is also a concern. Health concerns might also lead you to want to be closer to the hospitals in town.

One of the nicer areas with newer homes and a great view is the Quail Ridge community in Apple Valley. There are also gated communities built by Pulte Homes behind Jess Ranch. There are also many nice homes by the Apple Valley Country Club golf course. These areas are close to shopping at Bear Valley Rd and Apple Valley Rd while offering newer more energy efficient houses than some older neighborhoods which will save you fuel in your car and money on your energy bills.

Something to keep in mind about the Victor Valley: It has been an inexpensive place to live for years, and as such, the quality of neighborhoods is less fixed than other areas. Areas that used to be exclusive no longer are or certainly not to the extant that they once were.

This is my recent follow-up(February 20, 2010):

I'm not saying not to buy, but I am saying that you should do some "due diligence". Some web sites offer stats by zip code, but the Victor Valley doesn't have a lot of density, so our zip codes are not an efficient way to look for crime online.

Also, fences make good neighbors. I would look for a property with block walls and wrought iron fencing if I were in the city, and taller chain link fencing (above 5') in the more rural areas.

Also, don't let a nice neighborhood lure you into a sense of complacency. Nice neighborhoods become targets for thieves. My uncle in Simi Valley recently told me of a band of thieves who would drive a moving truck into cul-de-sacs of the nicer neighborhoods and break in and load up. Unless you and your neighbors are friendly, they might not even realize that the persons moving your stuff, aren't movers. Thieves target good neighborhoods (and the increasing political rhetoric seems to be stoking the flames of class envy) so these neighborhoods may put you directly in the crosshairs of criminals your were hoping to avoid. This is especially true if there are parolees or people on probation that are now acting as scouts in nice neighborhoods (and having California tax payers paying for their housing, too). So the criminals might 'commute' to your nice area.

There are some very nice houses outside of the city limits. Some builders and others built very nice houses in rural areas with plenty of land (to park vehicles) and then let the house go back to the bank. Many of these houses can be bought for the price of construction.

Also, in this economy, verify whatever any agent tells you with disinterested third parties. We are commissioned salespeople and things are slow, so it may be in an agent's best interest to NOT know and therefore NOT be liable to disclose information. I recommend talking to the neighbors in the surrounding housing and looking up local news by address number, and go to the local police station. Or pay someone to do these things and write up a report for you detailing what they did.

My last recommendation: Pick up the book "The Zombie Survival Guide". As strange as it sounds, it has a lot of really good information on making you and your home, more secure.

Thursday, February 11, 2010

Citigroup to trade deeds for 6 month stay in homes

According to the Associated Press, Citigroup will be trading a 6 month stay in your home for the deed. The article is here. The former owners will be required to keep the utilities on.

This is obviously cheaper for Citigroup than a full foreclosure with an eviction. It may also mean cleaner and more well kept houses for resale, as the former owners may come to see the bank as a partner in the move rather than a cold and heartless bank who wants to throw them on the street. To further that image, Citi is offering moving counseling.

Fannie Mae has a similar program, but rents the house back to the people at "market rates". I would be curious to see what Fannie considers market rates. Here in the High Desert, rents have been falling from $1.00+/sf to $0.50/sf is some cases. There are lots of move in specials, too.

I was unable to get a loan modification, and the bank has offered a $2000.00 cash-for-keys. My significant other and I are going to accept, and move into one of the vacant rentals, rather than fight the bank for 6 months and then get an eviction in addition to the foreclosure. Luckily her credit is good, and her name is not on the deed.

Tuesday, February 9, 2010

San Bernardino County Addressing Problem Redux

So, per my January 29th article, I had some issues getting the addresses straightened out. I thought they got fixed. I passed the gas-air test. I have Southwest Gas coming to put a meter in tomorrow. Then I got the letters from SB county code enforcement.

Seems that the computers and/or staff are still not capable of handling the job. Now my units do not have separate addresses OR A & B designations. So I called back to Code Enforcement for the Addressing division using the telephone # on the paper they sent me. I was told that there was another number, and when I called that number, I was told that Building and Safety was now in charge of Addressing.

I called the B&S # twice and it was busy. So now I'm just venting a little on my blog.

Is it any wonder businesses aren't hiring when government entities can't do the simplest of things well and now we have the largest expansion of government since the New Deal? Seriously, how am I to believe the bureaucrats are going to take care of my health decisions when they make up an addressing problem that didn't exist, and then complicate it further by giving me an addressing problem?

Friday, January 29, 2010

Hazards of Old Buildings, Utility Companies and Government Officials

A year ago, was in the process of rehabbing a duplex. The duplex has been around since roughly 1950. Unlike most duplexes that are given unit numbers or letters(like A/B or 1/2), this one has two separate addresses (15025 & 15027). I finished the unit, but it hasn't rented because, after serious and expensive modifications, I haven't felt the desire to put just anyone in.
Turns out that was for the best, because, after failing to get a loan modification for my place, I'm letting the bank have it, and moving into the nicest rental I own. I'm actually gaining square footage, new plumbing, ceiling fans in every room and tile floors throughout. I'm losing my garage, but I have another where I do most of my work anyway.
That brings me to getting the gas turned on. I called Southwest Gas and they told me it's been more than a year since my gas-air test and I would have to do another. This involves getting another permit from the county and having an inspector verify that the gas lines will hold three PSI for 10 minutes.
I went down to the Victorville branch of San Bernardino Building and Safety office, and the counter technician told me I needed to get A/B addressing for the duplex, and that I had to call Code Enforcement to in San Bernardino to get them, or have CE call her and "allow" me to use the addresses that have been in existence for 50-60 years, all because her computer didn't have the addresses.
It took a week but I finally got my permit. There wasn't any change on the forms at the Building and Safety office.

Wednesday, January 20, 2010

Why isn't your short sale going quickly?

Jeremy Brandt has just had an article on fraud (by the banks) is occurring in short sale transactions. It was just picked up by CNBC.

This is a link to Jeremy Brandt's article.

Monday, January 18, 2010

Why isn't the economy recovering?

I have been saying for some time that California real estate isn't headed for a recovery, but another dip (barring government intervention like the tax credits, and no growth policies like in SF). It's widely acknowledged that small businesses provide 70% of the jobs in the US.

The current federal and state governments are ideologically opposed to freedom for the people. The lack of transparency and the desire to regulate practically everything is evidence of this.

If you haven't read anything by The Heritage Foundation you need to read this article. More taxes on investment and on earnings to fund "health care". Which is little more than direct payments to insurance companies and pharmaceutical companies. These new taxes when combined with the expiration of the Bush tax cuts will take capital from investors.

Less money for investors, means less jobs. Investors use jobs as a multiplier for their capital. As long as a business is profitable, it is reasonable to hire more employees to make more profit. When taxation and regulation cause a business to become unprofitable, it either adapts or closes, leaving employees struggling as they must  find new sources of income. Read this article about a jobless recovery--which to me is an oxymoron.

As our economy continues to worsen, people are spending less (read this article). I've seen empty commercial buildings all over Southern California. Commercial landlords are handing back keys to the bank, just as homeowners have. There won't be any commercial property bailout--as there is no sympathy from the current administrations for profit makers.

An aside: If you have seen a number of commercial building projects in the works and are thinking this is a sign of an improving economy, you need to think again. If builders do not complete currently approved plans, they will have to submit new plans. These new plans will have to comply with newer building codes, and the newest set of Energy Efficiency codes are much stricter, which will mean much more expensive buildings. I think the builders are hoping that the economy recovers by the time they are done building (and hopefully it is)

So, after all these small businesses go out of business (or don't open at all due to startup costs) we will continue to see more people unemployed. These people are also likely to fall behind on house payments and eventually lose them, adding even more foreclosures to the market.

Let's not forget, that there are lots of public employee unions that are investors. They have retirement accounts that are invested in stocks. So profits also help unionized employees, too. Though, as many of the public employee retirements are guaranteed, any shortfall in retirement accounts caused by a decrease in value of stocks will leave taxpayers (once again) footing the bill, further slowing the economy.

Wednesday, January 13, 2010

My Answer to Ben

Recently, Ben asked a question on Trulia. I tried to answer it there, but the guidelines against spam prevented me from linking a couple relevant articles, so I'm reposting it here.

From Ben:
I have a 10 year interest only loan with 7 years left and no equity. I am current on my payments but the home is about $150,000 up side down.

I make 3 figures a year and have a 7 plus fico. I was recently denied a loan for a second home because of the status of my current home, and they think I will " Buy & Bail " The bank also countered and said I need to sell my current home to qualify. I also contacted my bank for assistence/guidence but there was'nt one thing they can do or advise. We need a bigger home, Should I sell my home short sale status?

This answer is going to go against the grain, but I'm in the area and know exactly what you're struggling with. I could rent a house that is new and twice the square footage for what my mortgage payment is in the High Desert.

The first thing to remember is that CA is a non-recourse state. The only thing the bank can do is hurt your credit and foreclose. They can not go against your other assets. If the loan on the house was not used to take money/equity out of the house, and is the purchase money loan, there is a form to fill out so that you do not pay taxes on the banks loss on the loan.

As you have not paid any principal down, I would advise you to think of all the money spent as rent (that has been an interest deduction--call it a rebate on the rent). I don't believe prices are going up in the next 3 years. In fact, the there are a lot of reasons to believe the government is propping up the housing market, and the Association of Realtors spent a lot of money keeping the tax credit going.

If you need a bigger house, and the above applies to you as far as your loan goes, WALK AWAY FROM YOUR HOUSE. Possibly ask your lend for a "cash for keys" deal, where you give them a "deed-in-lieu" of foreclosure and they pay you a small amount to move. It will help you get your credit back faster.

Read these two articles( refer to my blog, Trulia won't allow me to post the links here--The articles are HERE & HERE), and portions of my blog that refer to reasons why the housing market is going to be stale. Don't worry about your credit score. A credit score is good for acquiring debt.

There are a lot of larger houses in our area that you can rent for $1500/month. You also won't have to deal with maintenance. There are even some rent-to-owns, but most RTO's and lease-options require you to assume all duties of an owner.

In two or three years, you'll qualify for a loan again. And prices are likely to be at or near the same levels UNLESS our country's economic policies end up in currency devaluation ala Venezuela or Zimbabwe in which case we all have bigger problems than home ownership.

Ben, If you've come here, do some research on "recourse vs. non-recourse states" and talk to your accountant to see where your mortgage falls as far as tax liability.

Monday, January 11, 2010

Coming Inflation may make now a good time to buy. Times are strange.

I just wrote an article on my political blog about currency devaluation and inflation. I don't want to cut and past the whole thing here. But, buying real estate has always been a hedge against inflation. I still stand by the prediction that housing prices will, in general, drop. However, they could drop in value, and still increase in price if we get a currency devaluation or rampant inflation.

Furthermore, properties can be bought in the Inland Empire for less than the cost of construction. So, there are bargains and lots of them out in the market. I do believe that more foreclosures and REO's and short sales are on their way. We are going  to have deals for quite some time.

Saturday, January 9, 2010

Here's a link for homeowner's who need to hire someone.

Here's the link, and below is my commentary.

I would like to point out that in California, all jobs over $500 in labor and materials should be performed by a contractor, if you're not going to do it yourself. Though if you follow here guide for payment under painting you may not be left  in the lurch.

Also, I don't think a garbage disposal changeout is beyond most peoples ability. It's time consuming the first time (3 hours), but if you have a newer model (within the last 7-10 years) you can probably get the same brand which will match up to your old mountings. Don't forget to remove the knockout if you're hooking a dishwasher up, or you'll be trying to figure out why the dishwasher doesn't drain.

I've found that hot coffee also helps with unclogging drains. The heat and the acidity seem to break up grease, and the coffee helps clean stainless steel.

Thursday, January 7, 2010

Even More Reasons Real Estate May Drop

I've been mentioning for months that real estate, in most cases is going to drop. In special cases like beach front property, and areas where development is limited or not allowed, this won't be true, or as true.

Here are some links and reasons:
3 reasons home prices are heading lower

Housing Inventory Still Dramatically Oversupplied — Before You Add In The Foreclosures

Resets Projected to Cause Mortgage Crisis in 2010

Q3 2009 U.S. Foreclosure Heat Map

A nationwide forecast for real estate is below. If you look to the left side, you can click on your state

Wednesday, January 6, 2010

More predictions for a double dip in the California real estate market.

I was reading an article based on an LA Times article that reports that certain areas of CA real estate market are recovering.

As I've mentioned before, housing near the ocean, and in other specialty locations will rise. The article confirms this by saying San Diego, Los Angeles and San Francisco have had the highest recovery rates, and have increased for 5 months running. All of these cities have ports and beaches. All of the locations are pretty much built up, so there's nowhere to build. In SF's case, there are laws preventing construction. There are certain areas of SD county that can be built, but new building codes put in place after the fires of 2005.

Low density areas are still having problems. When prices in the big city start to drop, people (especially commuters)  in the outlying areas migrate inwards, leaving a high vacancy rate in places like the Inland Empire and farming communities like El Centro.

The downward trend in these markets certainly hampers the ability of these local governments to garner a money from property taxes as the foreclosed properties sell for less money and must be assessed on a lower valuation. This leaves these areas on a downward spiral until investors start returning.

Some investors can buy cheaply and charge lower rents, bringing rental values down further. For rental properties, valuation is based on rent rolls, so if landlords and property managers lower their rates to compete with new owners, then they can apply for lower assessments from the county. This can lead to even less services, and perhaps result in blighted areas, barring some sort of intervention/assistance from higher levels of government.

My experience as an investor and as a building inspector has shown me one thing about government intervention in the housing market. It is tied up in low-income projects. While the goal of assisting low income people may seem on the surface noble, the unintended consequences are dire, generally resulting in generational economic suffering. One of the principals of success is "How do you learn to be successful (or insert whatever adjective you like) people if you aren't surrounding yourself with successful people?" People in public housing learn to be people in public housing. (For a good start in mimetic theory, check out this link)I've also heard anecdotal evidence of prejudice against poor white people by administrators of color in low-income communities, but that's another story.

As long as there is a shortage of rentals, property prices will stabilize. So we are seeing prices stabilizing and rising (though probably temporarily) in the coastal areas. And we are seeing prices stabilize in other areas, but if you see lots of "move-in specials" in the local papers and online classifieds, be prepared to see prices drop in those areas, especially after the federal subsidies (tax credits) expire.

In fact, the $8000 tax credit was causing all sorts of pressure to buy at the end of last year. The new $6500 tax credit has put some wind in the sails of the CA housing market, and will allow people in outlying areas to move closer to the big cities, or upsize their dwelling in the suburbs. After it expires, if there is a commercial downturn, and people lose their income, we are going to see more foreclosures in the residential sector.

Then prices will come down again, unless there is further intervention by the federal government, but with all the red ink they are bleeding, that may not happen, though inflation may cause the property values to rise in any case. That raises the question, how do we cope with rising prices if the economy is stagnating or in a recession/depression? Keep in mind, all the federal stimulus of FDR extended the Depression into the Great Depression. (Read this article for a thorough treatment)

Obviously, we have to pay the piper at some point. The government will have to either raise taxes (further punishing owners and producers) or cut services or some combination of the two. I have yet to see any government program save money, so I don't buy into any statements of that nature, as no government program has come in under budget in anyone's memory that I know. The politicians have a vested interest in providing services in exchange for votes, so I'm not optimistic that we will see any action on that part.

Just some of my thoughts about what's coming down the road.

Monday, January 4, 2010

Keeping up

Lately I seem to be doing a lot more reading than writing. I've got several articles open in various tabs, that I really want to comment on. However, real life calls me away.

Happy New Year Everyone!