Tag Archives: equialt

The Renter Nation: What’s Behind It?
“After going through what was the housing market's darkest hour, housing is now one of the most popular investments in America.” (StreetAuthority) During the recession, many homeowners found themselves facing some very tough decisions. Renting a home became a viable, albeit temporary, housing option. Or so Americans believed. However, some former homeowners have permanently embraced renting, along with those individuals who cannot yet purchase a home, or those who remain indecisive about home ownership. Along with these changing views of the rental lifestyle, real estate investors are loosening the strings on short sale and foreclosed homes in their portfolios, allowing more rental homes to flow into the market. Together, these forces have created a renter’s nation. Jeffrey Friedman, CEO of apartment REIT Associated Estates Realty, predicts that “of the 5.5 million new households (newlyweds, boomers, college grads) that will be formed between now and 2016, an estimated 3.8...
With Homes for Sale in Short Supply, Prices Rise
Home prices increased 12.5% this October over last October, according to a report from Case-Shiller, which also reveals that the increase is likely due, not to a reduction in foreclosures, but a tight supply of unsold inventory. Home price gains are the strongest in eight years, according to the National Association of Realtors, rising in 88% of metro markets, and encouraging real estate investors. Among individual states, home prices rose 25.9% in Nevada, 22.4% in California and 14.2% in Georgia, considered the hottest market because this percentage represents the smallest gap across all states, and is only two percentage points away from the highest year-over-year price increase in thirty-five years. Cities posting growth of 10% or higher include Las Vegas, Los Angeles, Atlanta, Phoenix, Detroit, and Miami, among others. And there is more good news. The Case-Shiller report lists twelve US cities with double-digit annual returns, along...
Single-Family Home Rental Boom: Who Wins, Who Loses?
For two years, a single-family home rental boom has been sweeping through the Tampa, FL area. Investors are buying up hundreds of single-family homes in attractive neighborhoods and counting on renting them to both the thousands of local residents affected by foreclosures and short sales, and new residents arriving from across Florida or from the north. Demand Keeps Pace with Supply Property management firm Home Encounter reports an increase in leased homes between early 2011 and this past September from about 120 to more than 500 in Hillsborough County. But rather than reducing rents, as some renters wish, average rents have remained fairly flat across three years, running $1300-$1500 in Hillsborough and Pinellas counties. The biggest buyer of Tampa-area rental homes is Dallas-based Invitation Homes, a division of giant investment firm Blackstone Group.  Property records reveal the purchase of 1,801 homes in Hillsborough and Pinellas counties for at...
Risks That Crouch Hidden In the Grass
“As prudent investors and managers, we must be aware of the realities we face.” ~ John Mauldin No one would argue that there has been plenty of time for discussion of the 2008 financial crisis among central bankers. But coming up with answers, well, that’s a different crouching tiger. Central bankers have accepted no responsibility for ignoring the warning signs of excessive debt, keeping interest rates too low for too long, ignoring housing market bubbles, or failing to regulate banks properly. In fact, they were hugely rewarded with money, power, and prestige, leaving taxpayers to foot the bill for bailouts. Does this point to the need to remove banking supervision from central banks? Or to put politicians in charge of setting interest rates? Clearly, reform of the Federal Reserve is sorely needed. However, more rules and regulations are not needed - rather, holding the feet of central...
You Don’t Need to be a Weather Man to Know It’s Warm Outside
To simply make the declaration that “it is warm outside” can be a reckless statement, depending on your audience. A person from Orlando, FL will likely have a different definition of ‘warm’ than someone from Juneau, Alaska. You need more facts than just the air temperature to best assess the situation and make a comment that fits the scenario. Recently, RealtyTrac LLC. released its recap of U.S. foreclosures for the United States, during the 3rd quarter of 2013. The report found there were 131,232 properties indicating a default notice, scheduled auction, or bank repossession during September. On the surface, this may appear like a lot of properties, or referring back to our weather analogy, “warm”. In actuality, we need to view it in context of where the U.S. real estate and mortgage industries have been over the past few years. This number actually represents a...
Understanding Documents and Processes: Deed of Trust
In many cases the Deed of Trust is presented as an “offering” by a party that has an interest in presenting the investment in the best possible light through a sales department or Broker, both of which are commissioned on the dollars brought in.   In this quest to get the dollars from the investors to earn the fees, many times the documents and process are over-simplified to reduce objections and shorten the fund raising process.  Missing, inadequate documentation in Trust Deed investing carries a high potential for unnecessary litigation and or principle loss from the investor if the borrower defaults or the Mortgage Broker closes its doors. The documentation an investor needs generally falls under one of a two categories; Borrower and Property. Borrower documents include;
  1. Completed loan application,
  2. Credit reports, credit history verification or references,
  3. Income documents, financials, Tax Returns,
  4. Use of Funds plan (from the proposed Deed of Trust),
  5. Exit...
The Risk of Investing in Incomplete Property
These two issues are put together as they appear the most in the same transactions in private lending.  The staged or multiple funding scenarios are most prevalent in new construction and rehab loans – properties that are not ready to market or cash flow.  The Deed of Trust is created by multiple fundings at scheduled times for the borrower.  The borrower doesn’t want to pay interest on the entire loan if they can only use portions at a time to construction schedules.  So, the broker will set up a funding schedule with the borrower based on his needs and use of funds.  The Broker will then have several fundings or opportunities for the investors to get involved.  This scenario is risky as investors are putting their money into property that is not complete, therefore not marketable or sellable which significantly reduces exposure. And if one of...