Sacramento-Bay Area Debate

A few things happened to upset me this morning and this article about Sacramento was the biggest one. Before my first cup of coffee it bashed my sensibilities with how the real estate market has created a different social environment and how we as Sacramentans need to "adjust."

Now, don't get me wrong: I have nothing against people from the Bay Area moving to Sacramento. What I have a problem with is the attitude most newcomers have after they move to a different place. And this article epitomizes it for me.

I moved to Sacramento from Bombay (India) in 2001. Yes, it was a huge move. And sure, there were stretches when nothing seemed right, because nothing was the same. It was all new. Everything was different. And I had loved Bombay.

However I took the time to learn all about Sacramento. I learned to drive. Okay, I was also in love with a Sacramentan (who had moved here from the Bay Area himself, by the way) so that helped things along. I started small - book stores I liked, movie theaters I watched movies in, whatever. I made happy memories and went with them. A few years later, I was so in love in Sacramento, I wanted everyone to buy a piece of it, so I started selling real estate.

I didn't however try to mold it to my ex-lifestyle.

I did not brag about how much I loved Bombay.

And - this one really boils my blood - how little there was to do here!

Every city has something to do. You just have to look for it. And adjustment takes time. Sacramento is the result of hundreds of years and cultures and times. It's not going to fall over on its back and change because you think it has no culture and call it a cow-town.

If Sacramentans are blamed for being provincial, what is holding on to your place of origin but disguised provincialism?

Real Estate Investors - Where Art Thou?

I have two fantastic listings that would be perfect for someone looking for a deal, but unfortunately, buyers don't buy in a buyer's market. A truth that is sad as it is unprofitable. The human tendency seems to be to buy high and sell low.

That being said, I'm going to plug them anyway. Eternal optimism keeps me alive and successful.

7710 25th Avenue, Sacramento, CA 95820 - is a fixer for the right buyer. A four bedroom (yes, you read it right!) two bath home for under $200,000. 90 days plus on the market. $189,000 Go figure!

4900 79th Street, Sacramento, CA 95820 - not a fixer, but is a short sale, like the one mentioned above. Hardwood floors, three full bedrooms and two full baths (oops, bedooms usually are full, right?) $239,000

This is the time that separates the real investors from the wannabes. C'mon - time to prove yourselves!

Sacramento Brokers - all alike?

My recent move from Re/Max Gold to Elite Properties has been pretty well written about on the net now, mostly because of my broker-friend-associate John Lockwood. But there are reasons behind this move that I think are universal and worth mentioning because they relate to how clients find realtors they can work with as well. (Ooops, am I helping the competition here?)

First of all, most home sellers know instinctively if they want to work with a realtor or not. Any guesses what the FSBOs out there think? Any guesses they have hated their previous real estate agent? Now compare those experiences with maybe an agent working with a broker. Chances are they match pretty closely.

What I'm trying to say is this - in quite a roundabout way (I always knew I had a hard time handing out compliments!): People care about themselves more than they care about you. As well they should. Agents care about themselves when they apply to a real estate company to work at. Homesellers care about themselves and the home they're trying to get sold. Buyers care about the house they want to buy and themselves in it. As long as we are all aware of where the emphasis should be, (On the clients in a real estate transaction, on the agent in a real estate office) the entire system works swimmingly well.

I always wanted to work with a broker I could have lunch with and not get bored. Thanks, John! Here's to a great partnership!

Flipping Confidential Book Review Part 2

Okay, finally finished reading this one. Bear with me, I'm reading three books at a time, writing three blogs and handling two rentals (not to mention 2 listings and a buyer) God, the market sure is slow if I still have time to be bored now and then!

But, back to the book. Here's a huge criticism - I really wanted there to be colored pics. She talks about her flips, but I want to SEE them. All the pics are in black and white! If you pick up this book because you enjoy "Property Ladder," you're honestly better off watching the show. There is some pretty good basic advice, but overall I think Kirsten is a flipper, not a writer. Well, that might be a bit harsh - her writing isn't bad, but it's a little dry and the attempts to make it interesting are pretty glaring.

However, all said and done - she has been there and done that. And anyone wanting to be a succesful flipper should probably read the book.

3 stars out of 5.

Sacramento Real Estate Gal Wins Plaque...

...and finds out about it the day she leaves her company to explore greener pastures. Hmmm... I'm not happy about the fact that I received my first real estate plaque admitting me into the Executive Club for my "valuable contribution" to real estate sales and then only got it when I was leaving Re/Max.

And before you think I have a bone to pick with Re/Max, let me tell you that's not the case. If I didn't have such a fabulous opportunity offered by Elite Properties I would never leave.

Just an email, a notification, would have been nice, though.

There ain't no bugs on me, there ain't no bugs on me...

Am I the only one that finds herself humming this song every once in a while and then dies in sheer embarassment? I hope not! But seriously, here's an important reminder for all those people that have lived in their home for five years or longer - get a pest report. You have no idea what's going on under the home until you get a pest report.

Local Good News for Real Estate

... or should it have been good news for local real estate? Well, I'm only on my second cup of coffee this morning! But more to the point, we know that newspapers had been crying bubble burst for 2 years before we saw any downtick in housing prices and activity. So forgive me if I'm not excited by the news lately. But it is positive, so I feel the need to put it here.

The Press Tribune opined yesterday that although the rest of the country is facing major declines in values, Sacramento only fell about 3.5% and shows signs of stabilizing. Thomas Elias also states that California has largely been saved the worst of the market hits because there is a constant inflow into this state. Whew!

Today, the SacBee reports that the housing slump might be close to its bottom or at the bottom. And that this does not affect the rest of the economy. I've been saying for a very long time to buy, buy, buy. Buyers, if you wait too long for a deal, it's going to zip right past you and you'll be buying on the uptick! Not later than 2007. Mark my words.

Flipping Confidential Book Review

I am about halfway through "Flipping Confidential" by TLC's Property Ladder star Kirsten Kemp. At first, I was a little disappointed at how basic all the information provided in the book is, but then - think about this: All businesses profit because they have a good grasp of the basics. If they fail, it's because they've forgotten the basics and profits return when there is a return to them. In that sense, it's a pretty good read and definitely something you want to look into as a first-time flipper.

Kirsten emphasizes the numbers and how you must do your math, do your math, do your math. For me, there could be a little more character to the book like Barbara Corcoran's "Use What You've Got" (GREAT real estate book, but a little low on practical advice) but all in all a worthwhile read.

More later as I finish it! So far, I'd give it 3 stars out of 5.

Picture Update

I was talking to a friend about how misleading some listing pictures are, but then how about realtor pics?!? Of course, there are certain neighborhoods where if you are a female Realtor, your flyers get picked up more for your picture than the house's, but let's not go there. No, the real ones that irritate me are the ones where the Realtor is of high school age, you know? Cute, but doesn't help me identify him/her. And then there are the glam shots.

I know what you're thinking... and no, I'm not in love with mine. My husband took it at Christmas about three years ago on our home camera. "Look like you can sell a house," he said and I gave it my best. I will change it soon, I promise.

Just recently, I went to a listing and the client there said, You look so much better than in your picture. Well, thank God! I would hate for it to be the other way around!

Housewarming!

We're having a housewarming party at my new house today and looking forward to it! While the home is not in perfect shape (what with managing two rentals and getting them ready since we moved here) we have had no time at all to put this house in order. But we're looking forward to seeing some familiar faces in an unfamiliar (for now) setting.

Our big claim to fame? We have campgrounds all around us and we're less than an hour from Lake Tahoe! We should have a lot of visitors this winter and year round.

Which works out just perfectly for us!

The Two Kinds of Investors

There really are two kinds of real estate investors out there - the opportunists and the real ones and it's important to know which group you belong to.

THE OPPORTUNISTS: believe that someone must fail in order for them to succeed. These people are lying in wait for foreclosures. They say things like, "Well, the bank doesn't want a house, does it? Then it should be willing to give it to me for ....." and they quote a ridiculous price. Usually 50% under market.

THE REAL INVESTORS: understand that value is inherent (or can be added) and so it doesn't hurt the transaction to let someone else get a piece of your profit. This is the way alliances are created that can lead you to greater successes than any one fantastic deal will.

Personally, I don't like the opportunists and try hard not to be like them. There isn't a limited number of resources out there. Figure out a way to make both parties in a transaction happy and you'll feel better about being an investor. Leave something for the other person and your success will soar.

Inherent Value

I was watching the CNBC rerun of the special "The Millionaire Inside" and while I loved and hated a lot of what was said, one principle stuck out at me as a very good rule of thumb. I believe it was Phil Towne talking about his way (and Warren Buffet's way) of picking stocks.

He said, "Find out what the company is worth and then wait for it to go on sale." Simple, right? That's the beauty in this principle.

Here's how it applies to real estate: Find out how much it would cost to build a similar home in the Sacramento neighborhood you're looking at. You can easily get this information from a contractor or an insurance company in terms of a dollar per square foot amount. Then, find out the value of the plot. Adding them will give you the inherent value (or underlying value) of the house. Then, wait for it go on sale. Which means, if the price the home is being offered for on the MLS is under what it would cost to build it, you buy it. If not, you don't.

If it sounds that simple, it is! But your math has to be accurate and there is no substitute for due diligence.

Another thing, as with stocks, the general rule of thumb is, if there is any negative publicity in regards to accounting, you walk away from it, no matter how attractive the deal looks. With real estate, that could translate into the local economy, job prospects in the area, socio-economic change and so on. Remember: you can make projections only with stability. Any sudden changes (in this respect) are bad for investing.

You have to be able to trust the groundwork to make future projections.

Mortgage Rates on the Rise

The Bee reported that real estate is going to cost our Sacramento home buyers a little more now that interest rates have been on the rise. The average interest rate on a home mortgage is now 6.53% - and that is for a 30 year fixed rate. Last week, the same rate for a 30 year fixed mortgage was 6.42% This might be an indication that the buyer's market is beginning to come to an end. Or is it?

Here's what I found: To buy an average home in Sacramento costs about $300,000 all statistics aside. With a 20% down payment if you got a mortgage fixed for 30 years at 6% your monthly payments would be $1438.92 (without impounding for taxes and insurance. However, if interest rates crept up to 7% that same home with the same down payment would cost you about $150 more a month to purchase at monthly payments of $1596.73 Whether that seems like a fair trade to you to own real estate in Sacramento is for you to decide.

However, home prices are still low and there are bargains to be found out there, especially if you are searching for bank-owned properties and are willing to build some sweat equity.

Rental Available!

I've tried to keep this blog ad-free, but this one is personal. I have a house for rent and if you know anyone that might want it, please let me know or respond to this thread. It's a 3 - 4 bedroom, 1 bath home in Colonial Village - close to Folsom Blvd and Highway 50. Rent is $1300 per month with $1000 deposit. Fresh paint in and out, central heat and air, newly done floors, fireplace and automatic sprinklers!
By the way, did I mention that water and garbage is covered?

Flipping? Now?

I took time out to order Kirsten Kemp's new book on flipping homes - "Flipping Confidential" from Amazon and will review it as soon as I can get my hands on it.

By the way, the answer to the million dollar question: 7 and a 1/4 percent appreciation a year. I must admit, I cheated. I asked a very trusted friend - a mortgage broker who has done years of business in Sacramento. Of course, this appreciation is an average, which means that it will of course account for some very bad years and very good years. But now that you know the magic number, do the math and find out for yourself what your net worth will be when you retire!