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Tuesday, October 19, 2010
Is Now The Time to Buy a Forclosure? by Peter G. Miller
Is Now The Time To Buy a Foreclosure?
By Peter G. Miller
Since the end of World War II it’s been an article of financial faith that homeownership is a pillar of economic stability if not outright wealth. Owning your own home is good, owning several is likely to be better.
“Owning a home is a part of that dream, it just is,” said former President George Bush in 2002. “Right here in America if you own your own home, you’re realizing the American Dream.”
Such faith is not without merit. Home prices rose consistently year after year until in the past decade the string was broken. Given such recent results it’s easy to understand why a Time magazine cover story says “the dark side of homeownership is now all too apparent: foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago.”
What are we to think of this? Is real estate ownership dead and done as a financial opportunity, or is there more value to be extracted from housing? Indeed, is now a good time to buy real estate — or not good at all?
Perspective
If we are to think of real estate as an investment then all the usual caveats apply. There’s no assurance whatsoever that prices will always rise or that they will rise at all. There’s no guarantee that vacancies can be avoided or that the need for repairs will not create losses. As the lawyers say, the list of risks associated with investment real estate “include but are not limited to” a lengthy roster of potential downers.
But so what.
All forms of investment represent some level of risk. Would Time also recommend staying away from securities given that the stock market crash of 2008 resulted in losses worth $7 trillion?
Not only do all forms of investing represent risk, not investing also represents risk, the possibility of missing benefits as a result of inaction, what economists call an opportunity cost. While it might somehow be comforting, hiding in a financial rubber room is not a likely path toward economic advancement.
The Contrarian View
It’s absolutely true that property prices have flopped in most markets during the past few years. Even now we could have a false bottom, meaning prices might go lower. But the current situation may not be a bad thing if you’re on the buying and investing side of the equation — and you believe that real estate should be held for the long term.
While much is dark and gloomy, a number of fundamentals remain in place which greatly favors real estate:
• Mortgage rates are now at or near historic lows. Loans around 4.5 percent are currently available. With inflation and tax write-offs and the real cost of capital is around 1.5 percent for many investors.
• Property prices have taken a beating. The typical U.S. home was valued at $196,000 at the end of May — that’s 12.3 percent lower than the value of the same property in April 2007. In most communities, foreclosures and short sales produce even larger discounts.
• Real estate investment continues to enjoy substantial tax write-offs for mortgage interest, property taxes, insurance, depreciation, repairs and other ownership costs. While there is rumbling against such write-offs, the political reality is that home owners represent one of the largest “special interests” in the country, a reality which politicians cannot ignore.
• The population is growing while at the same time homeownership is down. Figures from the Census Bureau show that we had a 66.9 percent ownership rate in the second quarter, a rate that fell from 69.2 percent in 2004. We’ve lost more than 1.5 million owner-occupied properties.
• Reis.Inc., a leading provider of commercial real estate information, says in the second quarter that occupancy improved in 67 out of 82 markets. Fewer vacancies translate into higher rentals: Reis says rents rose .4 percent in the first quarter and .7 percent in the second quarter.
• There’s some evidence that public views have become more positive. Fannie Mae just released a study which shows that 47 percent of us believe home prices will hold steady while 31 percent think prices will actually rise. That means 78 percent of the public at least believes home values will not fall further. Whether such optimism is justified, realistic or will continue is something we won’t know for some time.
The Case for Investing
If you look at the investment factors outlined above you can see that interest rates are near historic lows. The nation is flooded with foreclosures and short sales, a flood which pushes down local home values but a flood which will one day recede. Home prices are down but rents are up. Tax benefits remain in place. The demand for rental housing is strong, in part because millions of people no longer have down-payment money or an interest in buying — or they’ve lost their home to foreclosure or a short sale.
“There are marketplace trends which suggest that now is a reasonable time to look at real estate rather than back away,” says James J. Saccacio, chief executive officer at RealtyTrac.com. “Many local markets seem to be stabilizing if not showing some signs of improvement. You have to wonder how many people in 2015 will look back and say ‘I wish we would have bought a few years ago in the good old days when mortgage rates hovered around record lows and home prices were down.’”
Will home values rise in the future? Will rental rates increase in selected markets? No one knows for sure, but it seems logical to believe that values are most likely to go up if you don’t buy at the top of the market — and we haven’t been at the top of the market for better than three years.
____________________
Peter G. Miller is syndicated in more than 100 newspapers and operates the consumer real estate site, OurBroker.com.
By Peter G. Miller
Since the end of World War II it’s been an article of financial faith that homeownership is a pillar of economic stability if not outright wealth. Owning your own home is good, owning several is likely to be better.
“Owning a home is a part of that dream, it just is,” said former President George Bush in 2002. “Right here in America if you own your own home, you’re realizing the American Dream.”
Such faith is not without merit. Home prices rose consistently year after year until in the past decade the string was broken. Given such recent results it’s easy to understand why a Time magazine cover story says “the dark side of homeownership is now all too apparent: foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago.”
What are we to think of this? Is real estate ownership dead and done as a financial opportunity, or is there more value to be extracted from housing? Indeed, is now a good time to buy real estate — or not good at all?
Perspective
If we are to think of real estate as an investment then all the usual caveats apply. There’s no assurance whatsoever that prices will always rise or that they will rise at all. There’s no guarantee that vacancies can be avoided or that the need for repairs will not create losses. As the lawyers say, the list of risks associated with investment real estate “include but are not limited to” a lengthy roster of potential downers.
But so what.
All forms of investment represent some level of risk. Would Time also recommend staying away from securities given that the stock market crash of 2008 resulted in losses worth $7 trillion?
Not only do all forms of investing represent risk, not investing also represents risk, the possibility of missing benefits as a result of inaction, what economists call an opportunity cost. While it might somehow be comforting, hiding in a financial rubber room is not a likely path toward economic advancement.
The Contrarian View
It’s absolutely true that property prices have flopped in most markets during the past few years. Even now we could have a false bottom, meaning prices might go lower. But the current situation may not be a bad thing if you’re on the buying and investing side of the equation — and you believe that real estate should be held for the long term.
While much is dark and gloomy, a number of fundamentals remain in place which greatly favors real estate:
• Mortgage rates are now at or near historic lows. Loans around 4.5 percent are currently available. With inflation and tax write-offs and the real cost of capital is around 1.5 percent for many investors.
• Property prices have taken a beating. The typical U.S. home was valued at $196,000 at the end of May — that’s 12.3 percent lower than the value of the same property in April 2007. In most communities, foreclosures and short sales produce even larger discounts.
• Real estate investment continues to enjoy substantial tax write-offs for mortgage interest, property taxes, insurance, depreciation, repairs and other ownership costs. While there is rumbling against such write-offs, the political reality is that home owners represent one of the largest “special interests” in the country, a reality which politicians cannot ignore.
• The population is growing while at the same time homeownership is down. Figures from the Census Bureau show that we had a 66.9 percent ownership rate in the second quarter, a rate that fell from 69.2 percent in 2004. We’ve lost more than 1.5 million owner-occupied properties.
• Reis.Inc., a leading provider of commercial real estate information, says in the second quarter that occupancy improved in 67 out of 82 markets. Fewer vacancies translate into higher rentals: Reis says rents rose .4 percent in the first quarter and .7 percent in the second quarter.
• There’s some evidence that public views have become more positive. Fannie Mae just released a study which shows that 47 percent of us believe home prices will hold steady while 31 percent think prices will actually rise. That means 78 percent of the public at least believes home values will not fall further. Whether such optimism is justified, realistic or will continue is something we won’t know for some time.
The Case for Investing
If you look at the investment factors outlined above you can see that interest rates are near historic lows. The nation is flooded with foreclosures and short sales, a flood which pushes down local home values but a flood which will one day recede. Home prices are down but rents are up. Tax benefits remain in place. The demand for rental housing is strong, in part because millions of people no longer have down-payment money or an interest in buying — or they’ve lost their home to foreclosure or a short sale.
“There are marketplace trends which suggest that now is a reasonable time to look at real estate rather than back away,” says James J. Saccacio, chief executive officer at RealtyTrac.com. “Many local markets seem to be stabilizing if not showing some signs of improvement. You have to wonder how many people in 2015 will look back and say ‘I wish we would have bought a few years ago in the good old days when mortgage rates hovered around record lows and home prices were down.’”
Will home values rise in the future? Will rental rates increase in selected markets? No one knows for sure, but it seems logical to believe that values are most likely to go up if you don’t buy at the top of the market — and we haven’t been at the top of the market for better than three years.
____________________
Peter G. Miller is syndicated in more than 100 newspapers and operates the consumer real estate site, OurBroker.com.
Tuesday, October 12, 2010
Richard Branson -"Top 5 Tips for Entrepreneurial Success"
"Q: If you were to list your top five rules for achieving success in business, what would they be and where would the “people factor” come in?
-Nicki McKenzie, Malaga, Western Australia
A: On behalf of her students studying business at the high school level, Annette Moran of Wavell Heights, Queensland, asked a similar question.
The people factor appears over and over on my list of top five tips. It is the basis of many entrepreneurial successes and, because many business leaders discount it, innumerable failures.
While the current thinking in business schools holds that all someone with an idea needs to succeed are focus, clarity and a good business plan, I have found that bringing together a great team that’s united by strong motivation, determination and bravery is much more important. Let’s look at how to get started.
1. Find good people.
The successes of Virgin businesses such as Active, Atlantic, Money and Mobile were all based on our assembling a great management team that had a vision, passion and a real sense of ownership.
Specifically, we look for leaders who have the ability to listen to feedback from employees and customers – this is crucial to keeping a service or product fresh and innovative. Often, when things start going wrong, you’ll notice that the staff members feel they are being ignored and good ideas are not bubbling to the top.
Leaders should have the character to make tough decisions and the passion and ability to inspire their staff and carry them through difficult times. Our best CEOs tend to be unconcerned about the size of their office or the thickness of the carpet.
2. Realize that the employees are the business.
A successful business isn’t the product or service it sells, its supply chain or its corporate culture: It is a group of people bound together by a common purpose and vision. In Virgin’s case, we fly the same planes as our competitors and our gyms offer much of the same equipment as other gyms. What separates our businesses from the competition? Our employees.
The best designed business plan will come to nothing if it is not carried out by an enthusiastic and passionate staff. This is especially true when things go slightly wrong; a friendly and proactive team can often win people round, averting a potential disaster or even turning it to your benefit.
Earlier this year, a Virgin America flight was diverted from New York to an airport in nearby Connecticut due to bad weather. The passengers were stuck on the plane for many hours while the small airport struggled to cope with the huge number of extra planes. It took far too long.
Afterward, CEO David Cush himself called many of the passengers to apologize, which may have helped to give those customers a sense of all the Virgin staffers who had been worrying about them and working to fix the situation.
3. Always look for the best in your people. Lavish praise. Never criticize.
Rather than focusing on mistakes, a leader needs to catch someone doing something right every day. If this culture of fostering employee development through praise and recognition starts at the top, it will go far toward stamping out the employee fear of failure that can stunt a business, particularly in its early days.
When mistakes happen – which is inevitable – I always take the position that you have to learn from them and try not to dwell on what went wrong. It’s almost always better not to go over the obvious with the people involved. They know exactly what happened.
4. Don't take yourself too seriously.
We at Virgin pride ourselves on trying to find the fun in our businesses, by which I mean that we try to ensure that both our staff and customers feel a real sense of warmth and affection.
I have led from the front on this – dressing up in costumes, trying all manner of stunts (not all going 100 percent right!), and generally showing that I do not take myself too seriously. My approach will not work for all businesses, but keeping a sense of perspective and not allowing management to be seen as aloof will help keep your staff onside.
To foster employees’ sense of warm, personal interest in clients’ needs, it’s crucial to ensure that everyone who works with you enjoys what he or she is doing, which means that everyone must be proud of the company. This is vital to building lasting success and ensuring your service has an edge over the competition.
To find employees who will take such an interest in our customers, we look for people who show genuine enthusiasm and character. We have a bit of an advantage over our competitors, partly because of our brand and partly because our roots include having hired people to work in the music industry, and now aviation and space, all of which attract real enthusiasts.
5. Screw it, just do it.
Finally, to succeed in business, you must have the bravery to give it a go. Starting a business is a big risk; an entrepreneur needs resolve and conviction to overcome the early hurdles. Most start-ups fail in the first few years, so a key ingredient of success is the ability to pick yourself up and try again.
If it starts to look like your business is not going to make it, some on your team might start to lose courage. At that crucial time, your knowledge of the people factor may make or break your company. Let’s look at this aspect further next week."
"Top 5 Tips for Entrepreneurial Success" http://www.openforum.com/idea-hub/topics/innovation/article/top-5-tips-for-entrepreneurial-success. 13-July-2010
Friday, September 10, 2010
Welcome to Shafer Realty Group Blog
Welcome to the Shafer Realty Group blog. Shafer Realty Group is a full service real estate company that brings a decade of extensive expertise in Brokerage and Development Services in the Dallas/Fort Worth Area, and around the United States. Shafer Realty Group focuses primarily on buyer and tenant representation, asset management, and general development Services. We strive to create an outstanding results for our clients, large and small.
If you are interested in buying, selling, leasing, or renting commercial property, please contact us at info@shaferrealtygroup.com
Ryan Shafer
Shafer Realty Group
100 Highland Park Village, Suite 200
Dallas, Texas 75205
If you are interested in buying, selling, leasing, or renting commercial property, please contact us at info@shaferrealtygroup.com
Ryan Shafer
Shafer Realty Group
100 Highland Park Village, Suite 200
Dallas, Texas 75205
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