Leading Indicators

With the real estate market moving up and down and sideways, many of my clients ask me what is going to happen next. Should they buy? Should they just hold on? Should they sell? What? It drives them crazy when the news reports doom and gloom.

Here are my two cents: look at what the Realtors are doing. This is going to give you a pretty good idea what has to be done. And keep in mind, real estate is cyclical. If what goes up has to come down, what comes down too quickly has to go up as well.

Most Realtors I know are moving - they are BUYING! This is a buyer's market. Buy now or forever hold your peace.

Cures for the common eye twitch

And before you fall off your chair laughing, let me tell you: an eye twitch is no minor thing. Try and research it online and you get nowhere. I've tried.

For the last month or so, my right eyelid has been twitching like mad. Not so much that anyone else would think I was winking at them, but pretty annoying all the same. So I searched Google and found other people have the same problem and they all get told by their doctors "It's just stress!" Get some sleep, drink more water, avoid caffeine, etc.

Here, by the way, is what works:
Any twitching muscle in your body, according to James McAfee in Your Body's Sign Language is a sign of a deficiency in the trace elements (Potassium, Magnesium) as well as a deficiency in Vitamins B6 and B12. Doctors are well to tell us to drink more water because if you drink alcohol regularly, it drains the body of water and vitamins. Try going off the wine for a few days and at the very least take a multivitamin. If you already do, take some extra B6 and B12.

It took 24 hours for my eye twitch to slow and in 48 hours I had forgotten about it.

The Essentials for Success as a Landlord Part 2

The last time we went over some of the absolute essentials for success as a landlord but some of my friends complained that they were too obvious. Which led me to say, well, being a landlord isn't "hard." It just takes careful planning, which is crucial to your success. So this time let's go over the planning necessary.

Have a plan: Do not be afraid to think of every possible scenario. Make a list of all your expenses. This includes mortgage payments, insurance, taxes, utilities (water & garbage, not electricity and phone). Go over it again and again. Make sure you know a year in advance everything you will pay for and then break it down monthly. If you are going to be making a profit, know how much. If you have a negative cashflow, be aware of that. Do not do anything, repeat, ANYTHING without knowing the numbers.

Stick with the plan: Sticking with the plan is just as important as having one. If you constantly change your mind, real estate investing is not for you. If your plans change, think about them more than once and then make a decision. Remember, real estate cycles are about seven years. If you cannot think forward about where you or your life will be for the next 7 - 10 years, real estate is probably not for you.

Stay local: Prices and real estate varies by neighborhoods, cities, states. Know your area. Or find someone who does. Then, you'll be able to spot the deals as soon as they are on the market.

Get adequate insurance: Very important. If you have lived in the home before you rent it out, you must change your insurance to be landlord's insurance. A lot of the times, this does not make a huge difference in the payments, but it does protect you in case of renters' damage to the home. A homeowner's policy will not cover renter's neglect, or worse, a casualty caused by the renter's dog.

Fix everything that needs to be fixed before advertising property: This is by far the biggest mistake. Renters will not rent a place if the fence is broken. Do fix everything that is broken before you start talking to neighbors or putting ads in the newspaper. It does not create a positive image in the potential tenant to meet a landlord unwilling to fix broken things.

Keep these essentials in mind and most everything else will take care of itself! Good luck!

The Opposite of Everything is also True!

It used to be the title of some old song or book somewhere, but lately, as I read the news and the financial advice columns almost in every newspaper or information source, this sentence comes to me again and again: the opposite of everything you read is also true. In other words, challenge everything you hear (and read).
Here are my three choicest examples of some commonly believed myths:

1. Real estate in Sacramento is dead: True, but only partially. For one thing, this is only in a certain price range. Homes above $500,000 have seen almost no change. And, if you're a first-time buyer hoping to strike a deal, the nest price range for you is in the $200,000 - $350,000 range. Don't think about buying anything in the fab 40s though unless you want to pay full price. It is the only neighborhood in Sacramento where the prices have not fallen. TRUTH: There's money to be made in every market. People buy in every market and sell in every market.

2. Realtors are cutting their commissions because they are "hungry": Again, true but only partially. (I am absolutely incensed by the number of articles out there trying to still say that realtors do not deserve the money they make. Read my article "Why Pay 6" for that.) But really, the fact that there is a glut of real estate agents out there makes no difference to the good realtors. There is a huge difference between licenses and active realtors. Just because someone has a license does not mean they are selling real estate. And chances are, if your realtor wants to cut his commission, he doesn't think he's worth the full 3% (which is the only part he gets, by the way - one side!) It's a sad fact that in the first year of real estate most realtors are practiced upon by their friends and relatives. That's where the high priced, low commissioned homes come from.

3. Now's the time to get out of the real estate market! I wish I could meet the person who propogated this one! As I always tell my clients, IF YOU DON'T HAVE TO SELL, DON'T! Sit on the property for another seven years or so and I can almost guarantee it will be worth more than what it is now. The time to sell was two years ago. The boat has passed. But hold on to it if you can. Real estate is cyclical. Mark my words and remember who to thank in 2014.