Residential Equity Building

Horribly Erratic Updates

2011-08-02T09:06:00.000-07:00

On the gardening front--rodents got my meager plantings. The dogs were no help.
I have traded around for an old rototiller and a chipper shredder. I am also still composting.

On the real estate front, I keep seeing lots of businesses close and think we're going to see more.
This the day after the "budget deal" I can only think that our country is going the way of Zimbabwe and the Weimar Republic. There is only one way for the US to "borrow" money. We are going to have to get it from the Federal Reserve, which will print up money--money that has no basis in wealth--just an IOU backed by the labor of the American people. So, the politicians have sold our children and grandchildren into indentured servitude for a bit of comfort in the here and now that is bound to be short-lived.
All the more reason for me to get my fall crops planted.

If I could give any real estate advice to you right now it would be:
0. Have a plan. Almost any plan is better than no plan.
1. Plant a garden. We had "victory gardens" during WWII, and farmers did well during the days of the Weimar Republic. Hand tools are really cheap at garage sales these days.
2. Be utility self-sufficient. If you can afford to move to a place with your own well, septic, electric, heating (wood stove and trees), and propane, do it. Otherwise, make your own home as self sufficient as possible.
2A. Learn to reuse as much as possible--Using dishpans and dumping the water on trees, or finding creative reuse ideas for things you might normally throw away.
3. Start storing food and seeds. You may want to store in a few different places as these will become valuable commodities worth killing for and stealing.
4. Prepare you friends and relatives. If your place has enough room, it would be better to have extra people to lighten the load of labor and defense. You'll have to choose whether or not you'll help those that you know are lazy. If you are lazy yourself, you'll have to push yourself. (see frequency of my blogs)
5. Lighten your load.
If you are in the city, you are in the most danger, sell extraneous items in your life and have a car, truck, or van ready to go to your friends in the country. Have this vehicle's fuel tank full every night. Garage it if you can. If you have too much garbage in your garage, sell it or give it away, so that you can park this car inside. It may save your life and the lives of your loved ones.
You car should have some camping gear or other "survival" equipment, and I would suggest over the counter drugs, organic seeds, ammunition in 9mm, .40 S&W, .45 ACP, 12 guage (or whatever it is you need for your personal firearm) and tobacco as trade goods. Don't forget a package of toilet paper. Things that are light and valuable if you can't get them at the store.
Even if I'm wrong, you'll be (more) prepared for the next Katrina, Fukushima, Northridge, LA Riot situation than the next person.

More Gardening and Herding Cats

2011-03-29T20:13:00.000-07:00

This was originally written last summer. I even have a picture of that poppy...on my friends computer.
So, despite going to bed around midnight, I woke up around five, watered the garden and checked my email. I think my cat, Ripley woke me up, wanting to go out.
We normally leave the window open for her to come and go as she pleases, but lately another cat has been coming in and eating her food. We thought that perhaps the cat was fighting with ours. This morning after letting Ripley out, I tried to go to bed, then heard mewing outside the bedroom window. I opened it up to let her in and there she is with the orange and white cat I chased off the other night. I called Ripley in--hoping to save her from a catfight--and she jumped to the window sill. Then the other cat just looked at me pitifully, hoping that I'd let it in too. Poor thing looked skinny and gave me the big eyes treatment (imagine Puss & Boots from Shrek), but I was unmoved by the kibble poacher (I hadn't had my coffee yet).
As I was up, I decided to get some more gardening done. I got dressed and drove out to the site that I've written about before. I started coffee at that location and placed some more screening on the ground, put more dirt in the tire wall, placed some railroad ties, and built a double compost bin. I moved some weeds, dirt, and organic (organically fed, no hormone/antibiotics for the horses on a holistic rescue shelter) manure into the bin. Then I moistened it up with the hose and moved it around with the hay fork.
All that took from about 6:45am to around 10:00am. That's when it started getting a bit too warm and bright to be out in the sun any longer. I chose to use that time to do some running around.
I paid some bills, posted a notice, picked up some items from storage, made some phone calls, and fueled the old 4runner.
I took siesta when I got home, then went to do some work in that vacant rental. It's mostly clean now. I need to vacuum again, then steam clean. I also like to wipe the kitchen and bathroom down with bleach, before showing a unit. Some people like pine scented cleaners, but the oils leave a film. Bleach just smells cleaner too me. I also need to wash the windows. I use soap and water. It doesn't harm any of the plexi-glass windows like an ammonia based cleaner would.
Even with the evaporative cooler it's just too hot. So I'm using time to write and do some reading rather than maintenance. So I'm cooling down with hefeweizen beer that I picked up at Big Lots (also a good place for cleaning and some gardening supplies). The beer is Carmel Wheat Beer, and is pretty good. It's better than Widmere (sp?)
Oh! And I was thinking of planting California poppies on the tire wall because they are so hardy and used to the soil up here. When I was out there I discovered a poppy had come up behind the wall. I'm taking this as a good sign.

Gardening Update

2011-03-23T19:42:00.000-07:00

No pictures today.
I find myself apologizing for my lack of diligence to this blog.
Anyway. I drilled some holes in the bottom of the spa for drainage. I intend to put some block, brick and stone in the bottom to improve drainage, and then put in some soil and compost. I was motivated by a neighbor to one of my rentals. I've been over working on a vacant unit and he's been rototilling his front yard for a garden. He's made me feel like a slacker, as he is on disability.
So I went back to my place and started some small projects. I leveled out the spa using a demo bar and a railroad tie as a lever and fulcrum while I shoveled some dirt under one of the corners. Then I drilled some holes into the bottom or the spa and the low spots on the seats. I had to find my bit extension due to water being in the spa from the recent rain.
Once my battery ran out, I removed the wheel from my wheel barrow and then took the wire wheel to the axle.
I'm kind of glad there's no pictures. All the rain has sprouted tons of weeds. They'll go into the compost (and probably the spa) but I don't want anyone seeing how remiss I've been.
The long and short of things was that I had all my rentals full, then 3 vacancies happened abruptly. And I've been looking for something other than real estate.
Hope you're having a good day.

2010-07-02T19:10:00.000-07:00

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 www.radicalforfreedom.blogspot.com

Still Working on the Garden

2010-06-27T16:02:00.000-07:00

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.

Gardening Part Deux

2010-06-21T21:37:00.000-07:00

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!

More Gardening Stuff

2010-06-07T23:12:00.000-07:00

So I've decided to post the pics I was talking about earlier.

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.

2010-06-07T10:02:00.000-07:00

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.

More rearranging the home office and submitting a commercial offer

2010-04-13T21:22:00.000-07:00

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.

New Computers and technology stuff

2010-04-12T23:32:00.000-07:00

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 Firsttuesday.us 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.

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

2010-03-30T17:54:00.000-07:00

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.

Are there more desirable areas of the Victor Valley?

2010-02-20T09:24:00.001-08:00

I answered this question on Trulia.com 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.

Citigroup to trade deeds for 6 month stay in homes

2010-02-11T08:25:00.000-08:00

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.

San Bernardino County Addressing Problem Redux

2010-02-09T16:12:00.000-08:00

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?

Hazards of Old Buildings, Utility Companies and Government Officials

2010-01-29T15:06:00.000-08:00

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.

Why isn't your short sale going quickly?

2010-01-20T17:38:00.000-08:00

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.

Why isn't the economy recovering?

2010-01-18T11:04:00.000-08:00

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.

My Answer to Ben

2010-01-13T07:27:00.000-08:00

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?

Ben,

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.

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

2010-01-11T19:39:00.000-08:00

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.

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

2010-01-09T11:22:00.000-08:00

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.

Even More Reasons Real Estate May Drop

2010-01-07T20:26:00.000-08:00

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

http://money.cnn.com/2009/12/31/real_estate/home_price_drop/index.htm

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

http://newobservations.net/2009/12/27/housing-inventory-still-dramatically-oversupplied/

Resets Projected to Cause Mortgage Crisis in 2010

http://www.dsnews.com/articles/index/loan-resets-projected-to-cause-mortgage-crisis-in-2010-2009-12-11http://www.dsnews.com/articles/index/loan-resets-projected-to-cause-mortgage-crisis-in-2010-2009-12-11

Q3 2009 U.S. Foreclosure Heat Map
http://www.foreclosurepulse.com/blogs/mainblog/archive/2009/10/27/q3-2009-u-s-foreclosure-heat-map.aspx

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

http://www.housingpredictor.com/better.html

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

2010-01-06T21:21:00.000-08:00

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.

Keeping up

2010-01-04T22:11:00.000-08:00

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!

Update for the last 3 weeks

2009-12-14T14:33:00.000-08:00

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.

James

The week in review

2009-11-22T17:44:00.000-08:00

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.

James

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

2009-11-14T17:33:00.000-08:00

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.

One more regulation for landlords to deal with.

2009-11-12T17:37:00.000-08:00

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

2009-11-12T08:45:00.000-08:00

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.

Heartfelt thanks to all the veterans, today.

2009-11-11T21:18:00.000-08:00

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.

Things people leave behind--and things they take.

2009-11-09T10:01:00.000-08:00

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

2009-11-09T08:29:00.000-08:00

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).

November Begins

2009-11-05T10:00:00.000-08:00

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?

2009-11-05T09:37:00.000-08:00

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.

Even More Renter Drama (or lack thereof)

2009-10-26T20:38:00.000-07:00

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

2009-10-26T10:37:00.000-07:00

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.

Coming Opportunities

2009-10-22T06:07:00.000-07:00

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.

I need something like "Dragon think and type"

2009-10-17T23:39:00.000-07:00

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.

The rental is clean.

2009-10-11T18:36:00.000-07:00

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.

Beginning of the month--Collecting rent, etc.

2009-10-10T22:01:00.000-07:00

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.

Free Dump Day at the San Bernardino County Dump

2009-10-09T22:15:00.000-07:00

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.

Listing Houses

2009-09-28T12:43:00.000-07:00

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.

Codewise Consulting

2009-09-25T21:50:00.000-07:00

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.

2009-09-25T10:34:00.000-07:00

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.

Some Bad News for the High Desert and Green Development.

2009-09-23T22:49:00.000-07:00

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.

2009-09-23T22:46:00.000-07:00

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. :-)

How to Sites

2009-09-21T10:48:00.000-07:00

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

2009-09-21T10:31:00.000-07:00

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.

Invited Out to Rock Crawling

2009-09-18T11:44:00.000-07:00

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

2009-09-18T11:40:00.000-07:00

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.

More news of a prolonged housing dip.

2009-09-16T13:16:00.000-07:00

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

2009-09-16T11:36:00.000-07:00

Here's the link:
http://rismedia.com/2009-09-15/realogy-ceo-richard-smith-urges-first-time-homebuyer-tax-credit-expansion/

A free picture viewer, resizer, etc. for Windows

2009-09-11T07:49:00.000-07:00

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.
http://www.faststone.org/index.htm

Remembering the Fallen

2009-09-11T07:26:00.000-07:00

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

The Ten Cannots

2009-09-10T13:37:00.000-07:00

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 FixHousingFirst.com

2009-09-10T08:42:00.001-07:00

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, www.FixHousingFirst.com, 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 itworks@FixHousingFirst.com; 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!

2009-09-10T08:15:00.000-07:00

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.

Get a Home Inspector

2009-09-09T12:46:00.000-07:00

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

2009-09-09T09:02:00.000-07:00

An article in the local newspaper:

International economist says High Desert can bounce back

Cash for Clunkers Analysis

2009-09-08T18:45:00.000-07:00

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.

2009-09-08T11:10:00.000-07:00

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.

Cleaning Ovens for the ADHD

2009-09-07T14:58:00.000-07:00

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

2009-09-07T14:34:00.000-07:00

Tired of automated call centers? Here's a link that gives the codes to get a human.
http://www.get2human.com/get2human_list.asp

Reply! Real Estate dot com Update

2009-09-03T17:38:00.001-07:00

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

2009-09-03T12:14:00.000-07:00

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.

More Reply!

2009-09-02T16:05:00.000-07:00

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.

Parts is Parts

2009-09-01T12:09:00.000-07:00

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

2009-09-01T10:28:00.000-07:00

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

Subsidized housing.

2009-09-01T10:23:00.000-07:00

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.

End of the month, and bank holidays

2009-08-29T16:53:00.000-07:00

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.

Lease-option or Rent to own

2009-08-28T13:18:00.001-07:00

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

2009-08-28T12:34:00.000-07:00

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.

More on Reply Real Estate

2009-08-27T15:22:00.000-07:00

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 Craigslist.org 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:
http://www.complaintsboard.com/complaints/reply-real-estate-lead-generation-c107384.html

Why you should do your due diligence on companies.

2009-08-27T15:13:00.000-07:00

Obviously, I've have made a mistake by getting involved with www.replyrealestate.com.

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:
http://activerain.com/blogsview/618869/avoid-lead-generators-reply-real-estate-recr-etc-

http://www.futureofrealestatemarketing.com/my-reply-to-replycom-waste-of-money

Rip Off Report: Reply Real Estate Avoid this company! San Ramon ... - http://www.ripoffreport.com/Reply-Real-Estate/Small-Business-Servi/Reply-Real-Estate-Avoid-this-c-2EZF9.htm

My Experience with Replyrealestate.com

2009-08-27T12:40:00.000-07:00

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 Replyrealestate.com.
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
Phone:
PH#DELETED 8/26/2009 6:15:41 PM
Email:
gXXXXXXX@msn.com
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

HESPERIA, CA 92345
Best time to Contact:
Evening
Phone:
(989) 321-4563 8/26/2009 10:05:02 PM
Email:
smith@hotmail.com
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:

smith@hotmail.com

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
XXXXXXXEstrada
XXXXXXXXXXX
HESPERIA, CA 92345
Best time to Contact:
Evening
Phone:
PH# DELETED FOR CONTACT 8/27/2009 7:08:17 AM
Email:
EMAIL DELETED TO PROTECT THE CONTACT

From the 'lead':
On Thu, Aug 27, 2009 at 7:39 AM, JOHN R RANDALL (THIS WAS THE SPACE FOR MATCHING EMAIL)wrote:
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
http://equityguy.blogspot.com/
All Cities Realty, Inc.

Moving 101

2009-08-24T10:21:00.000-07:00

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.

CHILDREN'S SCHOOL WORK & ART.
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.

COLLECTIBLES.
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 Craigslist.com.

ELECTRONICS
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.

YOUR FRIENDS
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.

CHARITY
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.

GARAGE SALE/YARD SALE
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.

ORGANIZATION
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.

Some thoughts on housing, both buying and renting

2009-08-22T09:49:00.000-07:00

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.

Renters, Sympathy, and Media

2009-08-20T18:48:00.000-07:00

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.

Keep your handbag or purse safe.

2009-08-20T17:44:00.000-07:00

Many women hang their handbags and purses in public toilets by the coat hanger hook provided on the back of the door. Professional thieves know this and case bathrooms for hooks that are easy to reach from the outside of the stall. They case the facilities and reach over for your purse while you are indisposed and unable to defend your belongings.

Relax, you'll get your answer on Tuesday.

2009-08-18T15:11:00.000-07:00

You should pay attention to the calendar when you start looking for property. Because certain days of the week and month are a better use of your time and produce less anxiety than others. And, if you are forewarned that certain days are unlikely to be productive, you won't stress when you don't get any feedback from the variety of professionals that you'll be dealing with.

You may have certain biases for and against certain days of the week. Just as The Bangles complained about a manic Monday, and we've all TGIF'd, and for the Monday to Friday crowd, Wednesday is 'hump day', I've come to appreciate that, in the world of real estate (and probably in many other places), certain days of the week are better for some things than others.

Because we are talking real estate here, we are primarily limited by two things, the government and banks. Government offices and bank offices are only open certain days of the week, pretty much Monday through Friday. Now, with budget cuts, many government offices are closing on Monday or Friday to cut costs. Banks and loan brokers are often open late on Friday and sometimes on Saturday, and can take a loan application at any time online, but I haven't seen anyone get a usable prequalification on a weekend.

So, if you want a loan you are going to be spending a weekday talking to a lender, even if it's only on the phone. So which day should you use? If you're able to, use Wednesday. Mondays are filled for many lenders with all of the business that has stacked up on the loan officers desk over the weekend, and in really busy times, Tuesdays get spillover. Fridays are the last day of the week to close and Thursdays are preparatory for Friday.

And, while this post has been waiting in draft form, I've gotten confirmation from three other agents, that on REOs and short sales, they almost never get an answer until Tuesday on any offer's they've made.

If you have made an offer on a house, you're not likely to hear from the seller, until the next Tuesday. This isn't, necessarily a bad thing. If you put an offer on a house that is 'acceptable' and time the offer to expire on Monday, it gives you the weekend to look at other homes that may be more desirable.

Once you submit your offer(s) you can relax, or at least be patient, because the listing agent might have 50 properties that he or she has received any number of offers on over the weekend. Just breathe deeply, keep you fingers crossed, pray, and submit the best offer you feel comfortable with on a particular property.

San Bernardino County Building Guidelines Booklet

2009-08-14T16:46:00.001-07:00

Here is a link to a 19 page PDF booklet on how to build a house in San Bernardino County. It covers most of the important information you would need to know about single family residential construction. The information will vary slightly from jurisdiction to jurisdiction, but the basics are covered.

Shoot the Duck!

2009-08-14T14:39:00.000-07:00

If you see a duck scroll across the screen, you can click on him to shoot him. A little stress relief and humor for your day. :-)

Credit Crisis brings opportunities for Seniors

2008-10-15T09:04:00.000-07:00

Three important events have occurred that bring rise to opportunities for seniors to increase their retirement income. The drying up of much of the conventional credit market, the limitation of conventional loans for individuals, and the collapse of housing prices. Why does this bring new opportunities for seniors?

At this point everyone knows how hard it is to get a loan after the Fannie Mae and Freddie Mac failures that culminated in disaster last month. It's hard for even people with good credit to get loans at the moment, and underwriters and looking very closely at all aspects of loans they are approving. New laws to prevent real estate speculation have limited the number of mortgages and individual can have to four conventional loans. Because of these conditions, combined, with housing prices that have dropped and opportunities in the REO market, seniors have the opportunity to hold mortgage notes to increase their retirement income.

A senior I know just told me she's making three percent (3%) on her CD and she's looking for ways to increase her retirement income, as SS only pays $700 per month. She owns her home free and clear, but has repairs to do to the house, especially in the kitchen, where the sink leaks, but she doesn't want to deplete her meager savings to fix problems that are a health hazard and are damaging her house.

Seniors have the opportunity (especially in California) to take reverse mortgages out on their homes and reinvest the money or loan it out at hard money rates. By buying investment properties or mortgage notes, seniors can increase their passive income and avoid endangering Social Security income. The senior above could take a reverse mortgage line of credit to do the repairs she needs, paying 7.5% or less in most cases, then draw from her LOC to loan out at hard money rates (15-24%) secured by 1st mortgages or rehab loans, or buy rental property for cash
and rent the out.

I have 6 conventional mortgages out, on 10 properties, and 2 hard money loans, and 2 properties are paid off--I own them free and clear. I bought smartly and all of these properties have positive cash flow when rented at 80% occupancy rates. Due to the new limitations on the allowable number of conventional loans, I can not get a conventional loan on the 2 properties that are paid off. I had to go to a hard money lender to get funding. I am getting a loan for less that 50% loan to value (ltv) at 11.5% but I am paying 8 points, so my apr is basically over 17%. I am happy to get the loan because it is going to allow me to earn a return higher than what I am paying. I've even seen websites out there that say they'll loan 40%LTV at 19%.

So, the above mentioned senior could conceivably borrow $100,000 at 7.5%, fix her house for $20,000, then lend the remaining $80,000 out (I recommend smaller loans to spread out the risk) at 15% with 7 points, and she would bring in an additional $1000.00/month and as the loans mature or are paid off early she would bring in the $5600 in points, which may increase her net return, because the investors don't want to pay the 15% rate for a long time. Or, a senior could invest the $80,000 remainder in a rental or several rentals and collect rents of $750 to $1600 depending on how they did it, but that would entail more management time, and I think the return on investment in the hard money market would be better and entail less risk now that housing prices are down.

I happen to know that there are several investors out there looking for the money to make their deals happen, and wouldn't mind paying the high percentage rates to get it done.

September was busy!

2008-10-15T09:01:00.000-07:00

I was extremely busy last month due to several new business ventures that I was trying to organize. I found out a lot about SBA loans, and the credit crisis, read about Bloward-Piven Theory, and have been (of course) following a bit of the political scene.

The increasing value of arable land

2008-08-30T08:20:00.000-07:00

As you look at current events and trends, you can't help but notice the increasing costs of fuel, and the trends toward composting, organic foods and alternative energy. I think these trends will increase the value of larger parcels while depressing the value of condominiums, and perhaps act as a force that will counterbalance the economic forces moving the populace near the population centers (fuel costs).

There are increasing amounts of labeling in the stores that indicate "hormone free", "organic", "not treated with pesticides", that show a consumer demand for foods that are not laden with chemicals. There are articles online and in newsprint that warn us that water treatment plants cannot remove many chemicals put into via runoff (chemical fertilizers and pesticides) and through our effluent (hormones and medicines that pass through our bodies). Now home water treatment companies are starting to take off, and you can hardly walk into a home depot without being pitched on one.

With all the above factors I see an increased demand for lots big enough for people to grow, at least some, their own food. There should, at least, be enough space for a greenhouse. The food grown could help offset some of the costs of the land, and I was in a farmer's market where "organic pesticide free" plums were being sold for $5/lb., so there might even be potential to make some money as well.

Useful Information--Credit Bureau Contact Info

2008-08-29T22:58:00.000-07:00

You're entitled to one free credit report per year from each credit bureau. Your credit score will determine the kind of loan you can get, and heavily influence the interest rate you pay. The higher the score the better. Hope this is helpful.

Equifax Corporation

PO Box 7402741

Atlanta GA 30374-0241

1800-685-1111

Trans Union Corporation

2 Baldwin Place

PO Box 1000

Chester, PA 19022

1 800 888 4213

Experian Corporation

PO Box 2002

Allen TX 75013-0036

1-888-397-3742

During Escrow

2008-08-28T13:14:00.000-07:00

This is basic to anyone who is in escrow for a house and is getting a loan (which is the majority of home buyers). Don't buy any more things on credit. You could negatively affect your credit score and disqualify yourself for the loan you're working on, and have to start over...if you can.
The reason not to charge anything is that lenders typically run your credit before closing escrow to make sure you can still make all of your payment obligations. If you make large purchases during this time(the time from the acceptance of your offer to the funding of the loan), you will change your debt to income ratio and change the loan program you're eligible for. If you have marginal credit you may disqualify yourself completely, especially in today's more stringent credit market.

There are always opportunities

2008-08-28T13:13:00.000-07:00

My Real Estate Prognosis

People have been asking my opinion on what's happening in the real estate market with all the foreclosures and banking (mortgage derivatives) problems and the rising unemployment rate.
One of the maxims of real estate investment is to buy the worst house in the best neighborhood. A lot of investors are picking up houses in good neighborhoods at prices we haven't seen for 4 years. I saw $300,000 condos in Oxnard, less than a mile from the beach going for less than $160,000 needing minor cosmetic work; some of these were bought and resold for $190,000 in a couple months. There are still bargains like this out there if you know where to look. If you have the capital and credit rating now would be a good time to buy.
In the early and mid 90's, outlying areas like the High Desert (Palmdale, Lancaster, Victorville, Hesperia, Apple Valley) essentially dried up with lots of vacant homes left empty on the market. In these areas, and areas like them (Hemet & Banning in Riverside, Santa Paula in Ventura) qualified buyers will be able to pick up really homes even more cheaply in the next six months to a year. However, those who wait too long will find that the homes in the better neighborhoods and near large employers will be bought up by many first time buyers who are now able to afford California real estate, and investors who are buying for long term appreciation and rental income, or just to "flip" after doing cosmetic repairs. One of my clients whittled his list of 50 potential properties down to 6 and found that 3 of those were already in escrow or contingent on inspections. This goes back to people buying up the homes in nicer areas or getting bargain basement prices on other homes.
In the Victor Valley, a lot will depend on how soon the rail spur into Southern California Logistics Airbase (SCLA--the former George Air Base). This will generate many new jobs in the area, and will increase property values around the base. Much of the older housing west of the base, and east of 395 will need to be updated or redeveloped or it will remain a blighted low income area. The newer tracts within Adelanto will see a resurgence in value and they present a lot of potential for profit.
For those readers who are renting, it's definitely time to start looking at buying. For those who are looking for rental properties, there are a lot of opportunities to buy housing in many places for less than it would cost to buy the land, pull the permits and pay the new higher fees ($35,000+ for a 2000 sq. ft house in Hesperia), and build the house ($70-135 sq. ft with $100 being average). What this means, of course, is construction of new homes has slowed down. On the up side of that, is now might be the perfect time to find a good deal on remodelling your home or constructing an addition to your home.
Unlike two years ago, when contractors were hiring just about anyone who could breathe, and you were lucky to be able to get a contractor to call you back, and they were backlogged for 2 weeks to 3 months, it is fairly easy to find people who are eager to work on your project. This is good for investors and homeowners as the surplus of construction workers and limited demand for them makes for lower prices in most cases.
Be careful to hire only qualified professionals. Get several references from anyone that you get a bid from. While it might be cheaper to hire an unlicensed builder, if he or she does bad work, there is no bond to go after, and nothing to win in court, so you could not only be out the original cost for labor and materials, but you'd have to pay to have it fixed and buy new materials. An unlicensed contractor without worker's compensation insurance could also sue you or your homeowner's insurance if they are hurt on your property while doing work under your instruction.
My prognosis boils down to this: Near job centers and in better neighborhoods, the homes are going to be bought up quickly as young professionals who couldn't buy in the last couple of years, either improve their neighborhood, or shorten their commute, and as investors compete with them in the same areas. Many very cheap houses will be bought up by investors who will use them as lower cost housing. Many of the mid range houses will sit on the market for a while as bargain hunters compete in the better neighborhoods (gated communities, near the beach), the rental neighborhoods (these are easier to rent out as there is always a demand for low priced housing), and areas near major employment centers. Many mediocre REO houses will sit until the banks either sell them cheaply, because no bank wants to sit on inventory.

Lender Requirements

2008-08-28T13:06:00.000-07:00

REO’s Shortsales and Prequalification requirements

With the number of REO's (Real Estate Owned by the bank) and short sale houses on the market today, it streamlines the purchasing process if buyers have a prequalification letter from their lender. Most banks are demanding that the prequalification letter be sent in with the offer, and some require that potential buyers cross-prequalify with specific lenders (at times demanding FICO scores and proof of funds) before they'll accept an offer. With this in mind I give you a list of the 11 most common things you'll need to take to your loan officer/mortgage broker:
1. Current pay check stubs covering the past 30 (or 60) days.
2. Name address and phone number for your employers covering the last 2 years.
3. Copy of the last 2 months bank statements for all open accounts.
4. Copy of driver's license an dsocial security cards--all borrowers
5. W-2's and Federal tax return for last 2 years.
6. Mortgage statements and/or rental agreements.
7. Complete copies of divorces and final judgement.
8. Self-employment records
9. Complete copies of bankruptcy and discharge.
10. Initial award letter for social security, pension, or other income.
11. Name, address and phone number for landlord for last 2 years.

Southern California Logistics Airport

2008-08-28T13:03:00.000-07:00

Southern California Logistics Airport
Current mood: excited

For those of you looking at investing in the Victor Valley area of the High Desert you have to go to http://www.victorvillecity.com/ I have been reminding friends and readers as well as my clients that Victorville, Adelanto, and Apple Valley are on the verge of exploding in the next year.

The page references the Dr. Pepper Snapple Distribution plant (http://208.112.75.1/News___Library/News.html?op=view&id=73) that is about to have construction begin in the very near future. That will mean construction jobs in addition to the 200 people being employed at the plant. A waste water reprocessing plant will also be built that will offer more jobs, and the be use of the intermodal rail yard will also be a boon to the local economy.

These people will need housing. While many of the people will (hopefully) be hired from the local area and have places to live, the jobs allow a wider choice of housing, meaning an influx of buyers to the market, which will stabilize and raise the prices of houses and rental housing in the market, because the influx of capital will definitely stimulate surrounding businesses as well.

Victorville's business friendly environment has also led to the development of branches for ConAgra Foods, Pratt & Whitney, General Electric Aircraft Engines and more--see http://208.112.75.1/Business_Climate/index.html.

While many people are out there sitting on the fence, there are a lot of opportunities for buying houses at prices that are close to or below the cost of building, as either a rental or as your own home. If you have any questions or want to be on my "cheaper than building it myself" list, drop me a line at jamesfoy@allcitiesrealty.com

Robin Hood

2008-08-28T12:59:00.000-07:00

Something had been bothering me for quite some time now so I need to get it off my chest, so to speak. That something is the interpretation we have been fed regarding the Robin Hood legend.

As we have heard over and over again Robin Hood, a disaffected noble, stole from the rich and gave to the poor. I don't disagree with that, but the premise needs expounding upon and further explanation.

Who did Robin Hood steal from? He stole from the Sheriff of Nottingham and Prince John. What are these figures responsible for? They were the tax collector and the government. Robin Hood was actually looting the coffers of an oppressive government. So the modern day equivalents of the Sheriff and the Prince would be the IRS and Congress (as they control the purse strings) who hands out the "voluntary" tax contributions of Americans to its pet projects.

Who did Robin Hood give to? He gave it back to the peasants. Remembering that in that agrigarian era, the peasants were the backbone of the working class. It was from their labor on the land that allowed the government to thrive. They would be from any of the specialized jobs that exist today to produce anything of value--whether it be tangible or intangible.

Sadly we don't have many disaffected members of our government returning our earnings to us, and the looting of the working classes just continues to fund the whims of the governing class.

Size Matters

2008-08-27T17:22:00.000-07:00

Now that I've got your attention, I refer you to the following link, which came out today (Aug. 27, 08):
http://www.realtor.org/rmonews_and_commentary/opinion/0809commentarysquarefootage
This article was extremely well timed for me as I just put an offer in for a client on a home which originally was built with 1705 sq. ft. While looking at the property in the MLS (Multiple Listing Service) I noticed that the property's listed square footage had increased 330 sq. ft. in 2005, which comported to an addition off the garage to the rear of the property. The initial issue I had with the "room addition" was that it didn't have any heating or air conditioning, so I decided to investigate the matter further (something called "due diligence" in investor's jargon). Please keep in mind, this property is an REO, and the bank is selling it AS-IS, so my client is "stuck" with what he buys, but might be able to sue me, my broker, the listing agent and his broker, or a property inspector in the future, if we miss these things.

I went to the local building and safety office and was not able to find ANY information on the property in question (PIQ), and then called the local assessor's office. I was helped by a very informative clerk, who let me know that permits had been pulled for the rear patio, the additional single car garage, a pole barn (since recycled by local bandits for the sheet metal), and a 330 sq. ft patio enclosure.

Aha! Now I had found the square footage. Unfortunately for the seller, and fortunately for my client there quite a difference between a "room addition" and a "patio enclosure." As a former building inspector and son of a general contractor working on my on GC license, I know the difference. A room addition is considered "livable space" due to the nature of it's construction, a patio enclosure is not, and is roughly worth half of what a room addition is worth on a per square foot basis for a number of reasons.

Starting from the ground up, here are the differences between the two, and hence the reason a room addition is more valuable then a patio enclosure.
1. A room addition is required to be structurally tied into the footings of the building and a patio enclosure only requires footings under the patio posts. Generally, a footing is a trench 12" deep by 12" wide with two 1/2" pieces of rebar placed near the center of the trench--1 about 3" from the bottom and 1 about 3" from the top. The rebar is generally dowelled into the existing footing of the house and this gives a continuous base to the house. In many areas a footing of this size will allow for a 2nd story, whereas a pad footing under a patio post would not.
2. Within the framing of a patio enclosure, there is no requirement for insulation in the walls or the ceiling. A room addition must comply with the standards for the house, and in the state of California, for additions larger than 100 sq. ft. must have a Title 24 document submitted with the plans for the addition for energy efficiency requirements. The PIQ is in climate zone 14, in the high desert, which is one of the harshest zones in the state, because the temperature range is over 100 degrees fahrenheit (8 in winter to nearly 120 in summer). As this was done as a patio enclosure, my client and I can't know what the R-value of the insulation is, if any, without opening the walls, and if I my client wants to upgrade to a room addition, he will have to open the walls, and probably upgrade any insulation that was originally installed in 1991 (probably R-7 or R-11) with whatever is required by his new Title 24 document (R-13 minimum possibly R-15), and then, of course, replace the drywall, re-texture, and repaint.
3. Speaking of drywall, most jurisdictions in California require 5/8" fiberglass reinforced drywall (type x) between the garage and "living spaces". As this was originally built as a patio, that was probably not done, and the insulation is not likely installed between the garage and the patio enclosure as it would not be required, like it would have been for a room addition.
4. Electrical is not required on a patio enclosure. The National Electrical Code requirement for livable spaces is "no place on a wall that is further than 6' from an outlet...excepting closet interiors" (so basically a receptacle every 12' along the walls) and a requirement for a light or a switched receptacle, that a light can then be plugged into. This patio had the light, but I don't believe it met the receptacle spacing requirements, though, to be honest, I didn't measure them, I was just "eyeballing" it.
5. Livable space must have thermostatically controlled heating, whereas, a patio has no such requirement. Strangely, as of this writing, there is no requirement for air conditioning in the desert. However, if my client tied into the existing central air, that would need to be addressed in the Title 24 of his plans or he could add a heater to the room, but that would leave him without air conditioning. The size of the room might require a larger hvac system as the old system may not be able to handle the extra volume (330 sq. ft with 8' ceilings is 2640 cubic ft.--roughly 20% additional load). California has additional requirements for heating and air systems (including duct leakage testing) that I won't go into here, but add to the cost of installing them.
6. Depending on the jurisdiction, some of the above requirements might be waived, but with the current slowdown in new home building, the building inspectors have more time to catch the defects, and my client would still need to pay to have plans drawn, submit the plans and energy compliance documents (Title 24), install the footing, add any necessary electrical and hvac, and ensure proper insulation and drywall installation, then texture and paint, and finally add flooring, if he wants to be able to legitimately claim the additional 330 sq. ft. when he goes to resell the home.

It could run from $6000 (if my client is willing and can do the repairs and doesn't extend the central heating/air--which would be silly in the desert) to $24000 if he has to hire a contractor to complete the work. I feel $15000 is a reasonable figure and reduced the offer on the listing sales price by a little more than that for a couple of other deficiencies in the property--like exterior paint, dilapidated fence, missing gate, and broken tiles in the kitchen and hallway.

So, if you're buying an REO or any other property AS-IS, size matters, especially as it helps determine price per sq. ft. (ppsf in future posts), but you need to know if the square footage indicated is truly livable space, or you could be paying more for a property than you should.

If you are in need of a house, for yourself or as an investment, please email me. I have over 11 years of real estate investing experience (mostly rehabs) and up to date experience with California energy requirements, as I was a city building inspector from 2006-2008. I would be happy to assist you in buying or selling your home. If you have questions on how to upgrade your home for the best return on your investment, I can help with that too.