Real Estate Book Review: Retire Rich from Real Estate

Marc W. Andersen's Retire Rich from Real Estate: a Low Risk Approach to Buying Rental Property for the Long-Term Investor is a book that keeps coming to mind when I talk to clients interested in owning rental properties.

This is a book that will appeal to even the most serious and cynical of investors out there. Andersen sidesteps issues of quick profits, piles of money, and other "flashy" images and words and focuses on what's important. He uses statistics and real numbers to show readers how buying real estate and holding it - in the words of Warren Buffett "forever" will eventually lead them to wealth. However, the path is not as easy as it sounds and Andersen has no problems telling you of the various pitfalls you will encounter as a landlord.

There is no dearth of good advice in the book related, but not limited to, the common questions most investors would ask if they were serious about their investments, such as:
- do single family homes make better rentals or is better to buy multiple units, or condos?
- should rental homes be located on main streets or tucked away?
- how long should I wait to hear back from the seller?
- what about problem tenants?
- how do I make the most out of the sale of a rental?

I believe that the first six months to a year of owning rental property will usually be a huge learning experience for most landlords. But knowing what you might be stepping into is also pretty good insurance against the biggest disasters.

Read the book. I guarantee you will learn something. Go ahead and click the widget above to get to amazon.com and buy the book! Happy Investing!

REO Buyers: Three Things to Watch For

Yesterday I wrote about how the new short sale addendum protects buyers from waiting forever for the house they made an offer on to get approved. Later in the day it made me wish we had something similar to that for bank-owned homes. The unfortunate truth with bank owned homes is that the buyers are almost always relying on every inspection in the book they can think of and then just plain luck.

Here are the three most important things however that buyers need to watch for when it comes to bank-owned homes:

1. Timelines always get mangled unless they are in the bank's favor - I remember being frustrated with short sales in the past because the lender would come back with an approval that was good for fifteen days. Most escrows take 30 days. However, this last weekend I wrote an offer for a bank-owned, foreclosed home for a client. The offer was more than fair - it was full price, cash and the buyer was paying for half the escrow costs. It has now been ten days and we hear the same thing from the listing agent - "Nothing yet." Today the message changed to "We have another offer, over asking. Bank will pick one soon." Just how soon?!?!? Message to banks and the listing agents that represent them: when you get what you're asking for have the wherewithal to accept it and move on!

2. RESPA goes out the door - The Real Estate Settlement Procedures Act protects buyers from having to accept a title company that the sellers want, especially if the buyer is paying for half the title costs, amongst other things. Banks will almost always have a title company they want to use and more often than not it will say so in the addendum they require the buyer to sign. Usually this doesn't bother too many buyers, but I thought I would mention it here because it always sticks out at me.

3. Banks are exempt from the Transfer Disclosure Statement - This makes sense since the bank has never really been inside the house. Chances are they don't know what's wrong with it. However, it does leave the buyer with a lot of questions that can be resolved only with numerous inspections.

Bank-owned homes are the cheapest homes on the market. Agreed. The discounts on these homes are the biggest you can get anywhere. Sure. But buyers should be aware of the potential problems and liability they assume by buying one of these homes.

Rate Cut as Expected by Most

The Federal Reserve just cut another 1/2 point - federal funds rate is now down to 3.0%

Read the details here.

Fed Meeting Today...

I'm curious to see what they have in store. After the last .75% rate cut, most experts expect another .50% cut today.

While this rate cut may take a long time to affect mortgage rates, it is still good news for anyone with equity in their homes or first time real estate buyers.

Wait and watch.

Short Sale Addendum Protects Buyers

The California Association of Realtors added a short sale addendum to the required forms in November of 2007. So far, this is one of the best forms I have seen and goes a long way in protecting a buyer's rights while buying a home in California.

For one thing, it limits the amount of time a buyer has to wait to hear back from the lender's approval - "the short sale contingency period." If the lender doesn't respond during this period, the buyer can walk out of the escrow.

Secondly, the addendum expressly states that all timeline begin after the approval from the seller's lender. This protects the buyer's security deposit from getting deposited into escrow before approval.

The short sale addendum should put a lot of buyers' worries regarding short sales at ease.

Real Estate Quote of the Week

As the 200th post on this blog, I give you this nugget:

"Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth."

- Theodore Roosevelt

Adding Value to Your Home Ragardless of the Sacramento Housing Market #5

A few weeks ago, I mentioned I was painting part of our house here in Pollock Pines and the lessons I learned about painting wood paneling.

Well, it's finally done - minus curtains, which will go up this week. And here are the results.





Hard to believe it's the same house, isn't it?






Here's another one:

Will Investors Save the Sacramento Market?

This winter has been different for sure. While last winter, the real estate market was still reeling from sellers realizing that their mortgages were too high for them to refinance and or sell and get market value to salvage their home, this winter seems to be dotted with home buyers.

Several things I've been reading lately seem to be coming to a head to make 2008 a very exciting year for real estate.

On January 4th, the Sacramento Bee reported that Sacramento real estate is gaining its price edge over the Bay Area and Southern California. And while that may be a different way of saying that prices here have fallen faster and harder than elsewhere in California, the net effect seems to be the same: buyers from other parts of California are beginning to express interest in Sacramento. Again.

Investors in Sacramento might take longer to recover, but since almost all of them depend on equity to buy other houses, once the prices start heading up, I have no doubt they'll be out there as well.

Another piece of news that surprised me (pleasantly) this morning was the Federal Reserve cutting interest rates by .75%! Since mortgage rates inevitably follow, the downward trend is good news for buyers and investors out there.

As I've said before, the real estate market can go up, down or sideways, but every move is almost always interesting!

Friday Fun

Three reasons for this post:

1. I'm feeling completely uninspired,

2. I have buyers coming in all weekend to look at houses from all over California,

3. I've been reading a bunch of other blogs - which, of course, leaves me with no thoughts of my own.

(4. Oh wait, I think that fourth one was supposed to be that I will be reading books to review today. Oh well.)

Here are a few interesting things to brighten your weekend:

Since taxes are on everyone's mind now, here's a good post about when not to fear the taxman

I doubt I'd ever spend money to buy any of these, except for maybe the cookie cup, but they are cute and remarkable in a purple cow sort of way.

And lastly, the reason why I'm not never perfect.

Short Sales with MLS Entry Only - What?!?!?

Everyone knows that short sales are not my favorite form of sales, and I believe the best prices and attractive options right now in Sacramento are bank-owned homes (REOs) but I seem to come across these entries in the MLS more often than I'd like - the short sale (not approved by the lender) and the classic "MLS Entry Only" status modifier.

The MLS entry only to me is the classic red flag that the listing agent has either collected a fee for entering the listing into the MLS and has no further duties throughout the transaction, or that he is a discount broker with no further duties.

No further duties? Excuse me, but this is a short sale!

Here's what the Metrolist says about MLS entry only listings:

MLS Entry-Only Listings are listings whereby the listing broker, pursuant to the listing agreement, will not provide any of the following services:

a. provide cooperating brokers with any additional information regarding the property not already displayed in the MLS but instead gives cooperating brokers authority to contact the seller(s) directly for further information;

b.accept and present to the seller(s) offers to purchase procured by cooperating brokers but instead gives cooperating brokers authority to present offers to purchase directly to the seller(s);

c.advise the seller(s) as to the merits of offers to purchase;

d.assist the seller(s) in developing, communicating, or presenting counter-offers; or

e.participate on the seller(s) behalf in negotiations leading to the sale of the listed property.

Said MLS Entry-Only Listings will be identified with an appropriate code or symbol e.g. “M” placed in the Status Modifier Field) in MLS compilations so potential cooperating brokers will be aware of the extent of the services the listing broker will provide to the seller(s), and any potential for cooperating brokers being asked to provide some or all of these services to listing broker’s clients, prior to initiating efforts to show or sell the property.

I repeat, excuse me, but this is a short sale! Usually a lot more work than the average sale transaction - especially for the listing agent. If he won't even advise his clients about my offer, just how exactly is he going to get it accepted at the bank and close this sale?

Where is Casey Serin?

So where is our very own Sacramento flipper Casey Serin lately? And why the interest in him anyway? I must admit, I must have commented on his blog a while ago and have been added to his list of contacts. So every time he does something - like get media attention - I get an email from him.

He's on the Dr. Phil show tonight at 7:00p.m. about "get rich quick" schemes.

I'll be watching!

Real Estate Book Reviews Coming Up!

I'm really excited to let you know that I was recently contacted by Sphinx Publishing and asked to review "Retire Rich from Real Estate: A Low Risk Approach to Buying Property for the Long-Term Investor" by Marc W. Andersen. Today, I actually received the book in the mail and am eagerly looking forward to getting to it.

So over the next few weeks, we should have not one but two real estate book reviews, both real estate investment oriented:

Buying for Profit, edited by Vicki Christian; and

Retire Rich from Real Estate by Marc Andersen.

Feel free to get a headstart on them by clicking their links above (you will be sent directly to Amazon.com or just wait for the review.

Best Financial Calculators Online

January is the perfect time for reviewing your financial goals. Some of us are still reeling from the holidays and tax season is still not in full swing. Which makes going over your finances and perhaps scheduling a family finance meeting a good idea in this time of year.

Here's a good calculator for checking your net worth. Bankrate.com has been my favorite site for this time of year because they have the best calculators available online. You are free to come up with any scenario in your head and see it in black and white, including refinancing and extra payments on your mortgage.

Another one for rent versus buy is here. If you're wondering if buying or renting a home - especially in this market - gives you the best return for your money, you might want to plug in some numbers here in the New York Times rent versus buy calculator.

This next one is not really a calculator, but it does help immensely if you're a landlord and wanting some basic comps around your rental. Think you're charging too little or too much? Check out the Rent-o-Meter.

Along the same line, here's a good calculator for what your investment property will yield you and if you should consider buying a rental home. This does require some research of your own regarding annual appreciation and inflation but it does tell you cashflow over the first 5 years and the annual addition to your net worth. Worth a look!

Ask Sacramento Real Estate Gal Answers!

Some weeks ago, I wrote about a Sacramento homeowner regarding a possible short sale on two of his homes. I have now done enough research to be able to answer this very important question with the seriousness it deserves.

If you are a Sacramento homeowner in distress, here are the steps you should take:

1. Admit it. Many people that call me never take action because they are in denial. In fact, a lot of them hope their home will never be foreclosed upon and are still in denial when the home is auctioned on the courthouse steps. Don't be that person!

2. Call the mortgage company. The first thing you should do when you suspect not being able to pay your mortgage bill, is call the mortgage company and ask them if they can rewrite the loan under new terms. Now, be forewarned that they cannot create miracles. If your home had been bought just two years ago and the value has plummeted, the mortgage company might not be able to rewrite the loan without you contributing some cash. Try and work it out so that you can keep your home.

3. Research the ARM freeze plan and see if it benefits you. If you had taken out an adjustable rate mortgage, hoping to refinance in two to three years, and can still make the minimum payment, you might be able to freeze your rate for some time. Here's the FAQ page about how you might be able to freeze your rate.

4. If none of the above options work, then your might have to consider bankruptcy and see if you can still keep your home. Research bankruptcy options here. If they sound like something you might be able to do, hire a bankruptcy lawyer or at least go in for a consultation. If you can keep your home until after this mortgage mess ends, it might be worth at least looking into.

5. If the mortgage company won't rewrite the loan and the ARM freeze doesn't help and you decide bankruptcy is not the way to go, you're probably resigned to the fact that you are going to have to move out of the home. A short sale might be possible and you should list your home as soon as you can. The mortgage company will not tell you what amount they will accept and probably will start the foreclosure process as soon as you stop paying your mortgage, but if your Realtor prices the home right and it shows well, you might be one of the lucky few that gets a short sale through, where the mortgage company forgives your debt and settles for less than what you owe. While there is some debate on how little or how much it affects your credit score, the most important thing about a short sale is speed. The quicker the home is sold, the less it brings down your score, so pricing it right is important. Also, the Mortgage Forgiveness Act may now forgive your debt even if your lender gives you a 1099, so you may not pay taxes on it. Consult your tax professional.

6. Of course, if none of these options work, the last option is foreclosure chosen by your lender. They are however required to follow a process to foreclose on your home and you will be apprised of the actual foreclosure date, so be sure to leave the home before that date. Because California is a non-recourse state, the lender can only take the house back and cannot pursue you to pay the outstanding debt. It does however stay on your credit history for seven years.

Landlords: Good Time to Consider Repositioning

The Sacramento Bee this morning reported that mortgage rates have fallen below the 6% mark for only the second time in two years.

This might be a great opportunity for landlords to reposition their assets to see if they can yield a better cash flow or can finally begin to cash flow.

Do the math at this mortgage calculator at BankRate.com and see if falling mortgage rates will help build your real estate empire!

Real Estate Quote of the Week

Landlords grow rich in their sleep.

- John Stuart Mill, British philosopher.

Sacramento County Condo Market Update

In November 2007 Sacramento condos gave a few of us hope. In December though, prices have fallen again, although sales and pending numbers remain the same. I guess it's really what you choose to focus on.

Anyway, here are the numbers:

Total condos sold: 57

Total condos in escrow in December: 61

145 more condos came on the Sacramento county market in December.

There are a total of 755 condos still on the market.

Median price fell to $185,000 from last month's high of $228,700 - a drop of 19%

Please note these numbers have not been seasonally adjusted. Some month to month change occurs regardless of the market, influenced by conditions like the weather, holidays and so on.

Real Estate Book Review

"Cottage for Sale Must be Moved" by Kate Whouley is a great book for anyone who has done any home repairs. We're not talking about the usual home repairs we do everyday, and ourselves, but the major overhauls - the kinds that need permits, other people and intrusions on one's privacy.

It's a memoir, great for rainy days like today. Whouley writes beautifully, quietly and the voice is a welcome change from the fix and flip books that now seem to line every real estate bookshelf. If you wish to buy the book, just click the image and you will be sent directly to Amazon.

Next review: "Buying for Profit."

Real Estate December 2007 Statistics are Here!

I don't remember who said it, but the quote is worth repeating: "Statistics are just a bunch of numbers looking for an argument." Well, here's the latest real estate squabble update.

December was not a month to brag about, but showed almost the same numbers as November, which you may recall was a little better than October in terms of pending sales. However, the pendings and solds do not match up as well as I'd like, which seems to suggest buyers out there changing their minds during escrow or just longer escrows, as is the case with short sales.

1763 single family residences came on the market in December.

805 units were sold.

1035 were pending, suggesting that buyers are out there looking.

Median price has fallen to $281,500.

Also read: November's statistics.

Sacramento Real Estate is Great...

... but living in Pollock Pines is something else. While most of the Sacramento region was getting flooded with rain, up here at 4000 feet and just about 45 minutes away, we got about 12 inches of snow.

This is the half melted picture I took of our deck railing outside our front door:

And if you've been wondering where I've disappeared, without sounding whiny, let me tell you that we had a power outage that began Friday morning and ended just last night. Thank God for generators and husbands that know how to wire them!!!

Because icicles just can't write blogs. Or sell real estate for that matter!

Sacramento Real Estate Gal enters 21st Century!

Okay, here's a little nerd talk. Probably will make John Lockwood very happy. (Or not, depending on whether he thinks I'm spending less time on Sacramento-Home by doing this!)

I was one of the lucky few to be gifted an iPod this Christmas and besides the very addictive Vortex game, I think there are a few things the little silver metallic friend is going to do for me.

Like help me learn more about investing in real estate.

Learning never goes out of style. The best aspect of learning about real estate is that it's both fun and rewarding. But I digress. Has anyone noticed all the podcasts out there about not just real estate, but investing in general?

You have? Smart! But if you haven't, a few minutes spent browsing iTunes and downloading a few podcasts can teach you quite a bit. Then, if you get addicted, download a few audio books! I think my iPod just paid for itself!

Happy New Year!

If there's one thing everyone has been saying lately, it's how horrible 2007 was for a lot of people. I agree. Besides the real estate market being pretty crazy, I had a big personal loss which takes longer to get over. My mother passed away at age 65.

However, it is losses that remind us of how good we really have it sometimes. So my resolution for 2008 includes being grateful and remembering to breathe!

If your resolution includes buying a new home this year, I can't compliment you enough for choosing the right time. Be sure to call 916-712-4255 to get an informed idea of buying the right home.

Blogs I Read

Sacramento Home

Sellsius Blog

Phoenix Real Estate Guy

Sacramento Entertainment

Okay, real estate aside, everyone's gotta have fun sometime. Check out these options Sacramento offers:

Radio Stations in Sacramento

Movie Theaters and What's Playing in and around Sacramento

Sacramento Stage and Theater

Museums in Sacramento

Sacramento Clubs

Regional Information of Help to Buyers

Here you will find links to County Resources, and transporation details:

Sacramento Regional Transit - Light rail, bus schedules and more.

Roseville Transportation

Sacramento International Airport

El Dorado County

Placer County

Sacramento County

School Information

Most people when they move want to know more about the schools in the area. Well, if you're moving to greater Sacramento area, look no further for information on the area's schools and scores.

Schools of Sacramento County
Schools of Placer County
El Dorado County of Schools

School test scores and Report Cards

About Sacramento Real Estate Gal

If you're looking for real estate in the Sacramento or surrounding areas, this is the place to be! Feel free to browse this site and bookmark it so you can visit again. If at any time you need further assistance or have a question, you can call me directly at 916-712-4255 or email me at purvabrown@msn.com

As a home buyer, you can search the MLS here, sign up for email updates when the property you are looking for hits the market, even create a property organizer to store listings you might want to watch or visit from time to time.

If you are ready to sell, I offer a free market analysis of your home. Just click the home value request and answer some basic questions about the property you would like to sell. Of course, you can always just contact me by email by clicking here.

While you're here, feel free to keep in touch with the daily happenings around Sacramento's real estate with the blog by scrolling down the page. Feel free to comment and do come back!