When is it a Good Time to Buy?

by Lance Kettler

In the real estate market there are a few rules of thumb to determine if it is a good time to buy.  One factor is the current interest rate.  At this moment in time the interest rate is at a near historic low. 

Another factor is supply and demand.  It’s widely acknowledged that if there is more supply than demand that prices will go down or can be negotiated down.  Right now we have a buyer’s market, there are significantly more homes available than there are buyers.  As a consequence, sellers have to work harder and concede more in order to win a buyer’s bid. 

One important factor to potential real estate investors is the rent to own ratio.  If the cost of renting is the same price to purchase or even higher investors usually consider it time to buy. 

In our local market we are seeing the cost of renting quickly approaching the cost to purchase.  And in the REO market the cost to purchase in many cases is already significantly lower than the cost to rent. 

Why is this so important?  If you are renting right now and could be spending the same or less to be building equity then you would be smart to purchase.  If you already own a home and are considering purchasing investment property you want to make sure that you can occupy your rental property.  By owning a mortgage that makes the monthly payment less than the market rental value you are ensuring that you will rent your property and that you will make a profit.

By all criteria now appears to be a good time to buy real estate, while it is an excellent time to purchase REO.

Rescuing Value

Rescuing Value

by Lance Kettler

One of the things that I am most passionate about in my life is animal rescue.  I have a great fondness for all animals and I am without any doubt that dogs truly are man’s best friend.  If you’ve taken the time to look at the Kettler Kares section of my website you know that helping our furry friends is one of my life’s missions.  Whenever I am at a rescue center or adoption event I am overwhelmed with joy when I see a canine friend adopted by a loving and caring owner.  Sometimes the animals have seen some rough times.  They aren’t quite themselves, they’re unkempt at best, injured at worst.  But it is always amazing to me how different they look after a bath and a little TLC.  The transformations are amazing.

A dear friend recently pointed out that my love of REO property is similar to my love of dog rescue.  I hadn’t ever thought of it quite in that way before.  But upon closer examination I definitely see what she means.  I love looking at an empty house and looking beyond the neglect to see all of the possibilities.  I love matching a home to a prospective buyer and knowing that there is a mutually beneficial relationship about to bloom.  I love driving by months later and seeing the home happily occupied, the lawn trimmed and flowers in the flower box. I derive great satisfaction out of seeing things of great value that have been overlooked restored to their rightful place of happiness and respect.

If you have a loving home and would be happy to welcome a furry friend into your life, make sure that you check out Kettler Kares for suggestions as to where you can adopt a pet in need of a home.  If you are interested in purchasing an REO property, savings tens if not hundreds of thousands of dollars while at the same time building equity please contact my office so I can show you the homes available for adoption.

 

Could’ve, Would’ve, Should’ve

By Lance Kettler

Is there anything you wish you’d done, but didn’t?  What about right now?  Is there anything that you are doing that you think you might beat yourself up about in 20 years time?  I’m more interested in what you aren’t doing.  What aren’t you doing right now that is going to lead to a Could’ve, Would’ve, Should’ve moment in your future? 

Nobody can look into a crystal ball and tell the future, so I don’t even try. But what about looking back?  There are lots of lessons to be learned from the past.  Everyone seems to be talking about the recession these days, are we in a recession, are we not in a recession?  The funny thing about a recession is that by definition in can only be called a recession after the fact.  We can only see true recessions in the past never in the present.

What can we gain by looking at recessions in the past?  First the reassurance that recessions happen, they are survivable and they pass.  We can also see that recessions are the period of time before a period of growth.  It isn’t a coincidence that millionaires are made in recessions.  A smart investor who is willing to shop for bargains can certainly find them in times of economic strife.  Then when times improve the investor finds themselves holding property that is valued at significantly more than they paid for it.  This is how millionaires are made, its called buy low, sell high. 

As you’ve probably heard, prices are low now.  In the REO market they are even lower.  I have clients who are purchasing property for 20-30% below market value.  Even by today’s standards they have a valuable property and as the market rebounds their investment is going to grow.  You can make the same choice or sometime in the future you could be saying I Could’ve, Would’ve, Should’ve.  The choice is yours.

 

Reo Treasure

By Lance Kettler

Do you like to hunt for treasure?  Some people like to hunt for antiques.  Some people like to find bargains on EBay. Others like to hunt for real estate bargains and treasures.  I have to admit I love to hunt for treasure. 

REO treasure comes in all different sizes and neighborhoods.  Not everyone is interested in looking for treasure and sometimes the treasure is somewhat hidden.  Some people walk into a home and are unhappy if they see flaws.

For me it depends on the flaw.  For instance if I view a home that has multiple repair issues, a hole in the wall, a missing lighting fixture, a damaged counter top, I don’t think, “What a shame.” I literally hear a cash register singing “Chu-Ching” because I know that although these are minor repairs and easily fixable they are going to force the seller to lower the price significantly.

Of course there are some flaws that I do say “What a shame.” If a repair is so extensive that it means that a home will not be able to be lived in for a significant amount of time, or if the repair is so expensive in nature that not even a concession on the seller’s part makes the sale worthwhile, then the home cannot be viewed as treasure.  Treasure is only treasure when the value can be seen with only a minimal amount of polishing.

The good news is that there is more treasure available right now that at any other time in our lifetimes.  If you are a serious treasure hunter, you don’t want to miss this opportunity.  Give me a call and let me welcome you to the hunt!

 

Buying In your own Backyard” Part 1

When you become interested in buying real estate beyond that of a primary residence, you might be lured into investing into an out state rental property or a second home.

DON’T DO IT!!!

I had breakfast recently with a friend who told me he had invested in four houses/condos, all out of state within the past two months.   He had attended a seminar of a self proclaimed guru who prescribed some formula that was going to make him and his wife rich in real estate.

To make a long story short, One of the properties my friend bought was a townhouse in Florida.  So far so good, except as they tried to rent out the unit, the market tanked and the builder could not unload his inventory.  The builder today still owns over 50% of the 300 homes that were built and they are all vacant.

Imaging having 150 homes in your real estate portfolio and that they are all vacant, burning the biggest hole in your  line profit game.  My friend has a property manager who for the past five months cannot rent out his unit. Now he will have the competition of the builder, who is a desperate move will hold on to the units and rent them until the market regains strenth.  Sounds like a huge REO debacle in the making. I know I should have been a psychic.

 

 

REO for the 1st Time Home Buyer

Congratulations on being ready to purchase your first home.  You probably could not have picked a better time.  Chances are that 3 years ago you were wishing that you were in a position to own a home.  Now that you are ready you might be hearing a large amount of conflicting advice.  Buy now, don’t buy now, it seems like everyone has an opinion and they are all conflicting.
 
Hopefully I can be the voice of reason in the cacophony of real estate predictions.  Here is the common sense guideline that really gets to the bottom line.  Value is value.  What does that mean? Markets are going to fluctuate, they always have and they most certainly always will.  When you own something of value you can survive any market.  It’s important to look at cost, but always remember to factor in value.
 
 If you are a first time home buyer and want to score a great bargain with high value then you certainly want to take a look at what the REO market has to offer. Give me a call and let me show you the value that is available to you.

REOs on the Rise!

ForeclosureS.com, one of the most recognized authorities in foreclosure statistics is reporting that REOs are up more than 70% in the first quarter of 2008. This number comes as no surprise to those of in the real estate business.  We expect for the number of REOs to rise over the next few months as more and more of the ARM loans reset and home owners are unable to meet the new adjusted mortgage payment, refinance their homes or sell the home quickly for an equitable rate. 
 
This large amount of REO property entering the market is potentially a once in a lifetime opportunity for investors who are looking to make a long term investment in the real estate market.  If you are interested in positioning yourself with valued real estate for bargain prices you need to take a look at what the REO market has to offer. 
 
In all areas of real estate it is important to have the right professional representing your interests; this is especially true in the REO market.  Banks and lenders are reticent to release their property holdings list to the public.  If you aren’t working with the proper professional who has access to this inside information you can lose valuable time and information.  We are the leaders in the Los Angeles REO market, contact our office and ensure that you are working with the highest caliber professionals in the business.
 

Next up: Which foreclosure property is the best buy when there are so many foreclosed homes in the area you want to live in.

Tying into our last article about “Foreclosure logic”, here are some tips when you set your sights on a specific community of homes.

 

Pay close attention to your surroundings. Is there traffic in the morning and /or evening that wind its way past certain homes as a shortcut to the freeway or major thru fare?  Are there some homes in the tract that are on smaller lots or have only a carport vs. an enclosed garage?  Are some homes protected from thru traffic because they are on a cul de sac? Do some homes back up to commercial buildings?  Do some properties have an alley where others have no access (trash cans in the rear, out of sight vs. in the front yard?  Are there restrictive homeowners rules that prohibit RV’s and even cars from being parked out in front of the homes?

 

These are just a sample of fact finding questions you should ask in determining long term value. Remember in the biggest picture you are “buying this house for what the next buyer will want”.  Sound confusing?  We will answer this next on Lancelot Blog .

 

 

Foreclosure Logic

It is important when searching for a home to know that there is always a reason why a property went “REO”.  The first question I ask myself is “Why did these people just walk away from this home?” 

Many times the answer is obvious. The owners lost their job, or an illness, or divorce.  Other times the answer is subtle. The property is on a busy corner, or there is commercial in close proximity. When this is the case the owners make an “executive decision” to vacate, as the overall neighborhood is declining in value.

 

We are witnessing this in communities throughout the U.S. right now. Recently there was a front page article about a tract in Denver just south of the airport area. Blocks of homes are in foreclosure. Where people have little or no equity and have to pay a mortgage, property taxes and insurance, they cannot justify the expense, so they pack up and vacate. These same folks then rent in the same neighborhood for 50% of what they were paying for home ownership down the street. Example: Rent is $1,100, where principal is $1,860, property tax $240, insurance $95, and equals $2195!

REO: The Hot Investment Opportunity of the Decade

Why are REOs so hot right now?  The simplest answer is that there are so many of them. With a record number of homes entering foreclosure and record numbers of homes going on the auction block, it only stands to reason there would be a record number of REO properties.  As we discussed in the last blog REO means property that was foreclosed upon and did not successfully sell at auction.  The property has now reverted to the lender. 
 
Even in economically sound times there are REO properties. But in general a bank won’t have a large inventory of REO properties. They don’t want to have a large inventory of homes.  They aren’t in the real estate business and it actually reflects badly on the bank’s business to have a long list of bad debts.  Currently lenders are finding themselves with an increasing inventory of REOs.  The upkeep and maintenance alone on these properties is expensive and undesirable for the lenders.  They prefer to sell the property than to maintain it.  This creates a motivated seller.
 
Across America we are seeing a large number of REOs entering the market on a daily basis, with motivated lenders looking to sell to qualified buyers.  In some cases we are seeing REO property sold for record discounts at better than average interest rates.  If you are waiting to buy your first home or to further invest in the real estate market – don’t wait.  Let me show you what the REO market has to offer you.  You won’t be sorry.