Foreclosure Auctions - How They Are Run And Latest News

October 20th, 2011

Sorry for the long dry spell between posts - been extremely busy taking care of clients AND getting this new fix’flip business of the ground which leads me to today’s post on the subject.  Since I have identified foreclosure auctions as really the only viable source left of finding wholesale real estate deals, I have targeted them for the past month in trying to acquire below-market properties to rehab and resell for profit, working with investors that have the cash to invest in this potentially highly lucrative field.  I say potentially because for it to work, we have to acquire homes to fix and resell and for almost 1 month of analyzing properties and bidding on them, I have, so far come up dry.  I’ll get to that in a moment…..

But first let’s examine how foreclosure auctions work to see if they’re for you.  Representing as many out-of-state clients as I do (mostly out of country, being Canadians), I have concluded that this is not really a viable option for those buyers whether they be investors or vacation home purchasers for the following reasons:

1. You must provide a $10,000 cashier’s check at the auction to even  bid at them

2. You must be prepared to pay CASH (certified and delivered) by the next business day if you win.  So the only bidders are cash buyers or investors that have a line to hard money that comes at a high price - 18% interest.

2.  You must be present at the auction or have a representative present to bid on a property

3. You can only really find out what deals are coming up at tomorrow’s auction either late today or sometime tomorrow so there is very little time to prepare and know what you’re bidding on

4.  Obviously because of #3 above, there is no way to properly inspect the properties you wish to bid on to get a true sense of their value

5. You need to verify lien position being auctioned off and any outstanding taxes and IRS liens.  If you end up buying something other than the 1st lien position then you are SOL and can say bye-bye to your $10,000 or even the price you agreed to pay at the auction if you win.

6.  50% of the time or more, there are people living in the home you are bidding on which means that if you win the auction, you are responsible for evicting them from the house.

7.  Properties can be postponed or cancelled at the last minute leaving you dejected with alot of time spent for nothing (more on that below).

So…as you can see, you need to be quick on your toes, and have access to all the market and property data to perform the necessary research to place yourself in position to bid on properties the next day.  It is really tailored to investors that are present in Phoenix or work with companies that work with them to bid on their behalf.  And only investors with extremely rounded market knowledge on property location and condition should be doing this kind of bidding and buying as it is wrought with pitfalls and traps, as outlined above.

I know many of my Canadian clients would love to purchase these kinds of deals but when you evaluate everything that you must do to be able to bid on a property, it really makes it almost impossible to accomplish.  If you have any suggestions on how I could possibly assist you in acquiring a property at auction, please feel free to give me a call.  I’m all ears.  For now, I am reserving this business for my investor that I work hand in hand with to acquire, fix and resell properties for profit. 

So how’s it going with my new business?  I have no idea because I have been unable to purchase a property yet!  And it’s not for a lack of trying.  I have been burning the midnight oil evaluating deals from 6 in the evening to 1-2 am sometimes and then again from 6 am to 9 am to select properties worth going after.  I have been placing an average of 2-5  bids PER DAY on homes with no luck as of yet.  So to say that I am frustrated right now would be an understatement.  I know that eventually it will come together but it is certainly taking its sweet time to get rolling.

So why the difficulty?  Here it is in a nutshell….

1. Majority of properties scheduled for auction either postpone or cancel the day before or day of the auction.  I had one day this week where I had 6 bids going in on various homes and 5 of the six postponed minutes before the auction began! Boy, is that fun!

2.  Many of these postponements recently have been for 1-2 weeks.  Some for a month.  The shorter duration postponements are a function of a very specific market dynamic that is just occurring recently (about the time  I entered the fray) which I will explain in a bit more detail below.

3. Due to the number of postponements, there are less properties actually selling each day at auction. So, with a set number of investors at the auctions, many with a quota they need to fill, they are bidding up property prices well past wholesale into the realm of retail values.  Obviously, I cannot buy homes at retail prices if my intent is to fix them and resell them quickly - there is no margin.  So the lack of supply and high stable demand has been pushing up values.  Once the supply problem gets corrected, I think you’ll see bid prices drop and value return tot he process

So what’s with the postponements?  Well…I’ve heard from a reliable source that these short term postponements are being caused by legal changes in the paperwork required to hold a property up for auction and sell it.  The firms conducting the auctions are scrambling to meet these paperwork requirements to ensure that all auctioned properties are done legally so there is no backlash or lawsuits for improper procedure.  So these law firms are stalling the properties for auction buy a week at a time while they work furiously to get all the necessary paperwork in order.  Once they feel confident the paperwork is done properly, then BINGO!  The property sells.

So the hope is that once these firms put systems in place and get everything properly organized, these short-term postponements will stop.

the other thing to keep in mind s we approach the holiday season (Thanksgiving and Christmas), is that banks do not like foreclosing on homes during this time frame being scared of getting bad publicity.  So many foreclosure auctions planned for late Nov and Dec are postponed until Jan and in Jan a huge backlog of properties go up on the block causing a feeding frenzy for investors.  I have been told that some investors that are familiar with this process gobble up deals in early Jan and set themselves up for the first half of the year just form that one month.   

I will post an update of my progress in a couple of months.  Looks for my next article in the coming days which will highlight the current Phoenix real estate market trends.  The market is quite bonkers at the moment - it’s hard to figure it out.  Statistically, changes are occurring on a monthly - sometimes weekly - basis.

And as always, please visit my website, www.CanadiansBuyArizona.com for the latest market data and trends on the Metro Phoenix housing market as well as all kinds of tools to assist you in finding and buying homes in Arizona.

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Real Estate Market Update - Historic Month Of June!!!

July 20th, 2011

June was the month to end all months as far as real estate goes in Metro Phoenix.

June home sales in the Phoenix metro area surged to 11,125 units sold, the highest number of transactions in a decade, according to a new report released by the Arizona Regional Multiple Listing Service Inc.  Not only that, according to the current ARMLS data, 2,216 homes closed on June 30 across all areas and types, the largest total we have ever recorded for a single day.  It beat the previous record set on June 30, 2004 by nearly 57%!

The June number even eclipses the sales figures during the 2005 housing boom. June sales also were nearly 20 percent higher than June 2010.The make-up of these ARMLS sales was also exceptional. Short sales and pre-foreclosures totaled 3,057 across Greater Phoenix, up 49% from May. Lender owned properties were up only 3.4% at 4,508, while normal sales were up only 3.8% at 3,416.  The exceptional number of short sales had another impact. With normal sales dropping from 34% to 31% the monthly average price per sq. ft. fell just under 1% from $82.55 to $81.75 between June 1 and July 1. REO pricing per sq. ft. went up 1.0% and normal pricing went up 1.1%, but short sales and pre-foreclosure pricing went down a huge 4.7% across Greater Phoenix.

We currently sit at an approximate 2.6 month supply of homes in the Valley.  This actually typically represents a SELLER’S market.  More buyers chasing fewer homes.  We’ll see if this trend continues into the fall but we may be looking at the bottom from the other side right now.  Even if we have alot of distressed sales in our market through foreclosures and short sales, if there are more buyers than sellers, it means the market will tighten and prices will start to rise.  Let’s pay close attention to the next few months and see if the trend continues or reverses.

It should be interesting.  Stay tuned…….

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Investing in Distressed Metro Phoenix Real Estate - Single Family Homes Is The Way To Go!

May 12th, 2011

There has been a recent shift in my thinking a few months ago on what form of real estate investors should now be purchasing in Phoenix Arizona.  Up until Jan/Feb, I was a strong advocate for condos, town homes and other smaller attached homes because of the price-to-rent ratio.  We were finding town homes priced around $35,000 in good condition that rent for between $650-$700 per month and produced 15-20% cash-on-cash returns.  Then some of my clients led me around town looking for inexpensive single family homes and I was shocked at what I found.

I found single family homes that were priced at between $55,000 and $75,000 and were renting for $850-$1,000 per month! 

You must be thinking, ‘well…those must be older homes in terrible neighborhoods’.  No!  Not at all!  These are homes in newer subdivisions that were built between 2002 and 2006.  Three and four bedroom homes of 1,300-1,800 sq.ft. in decent, blue-collar areas with 2-car garages and nice, newer-style floor plans!

When you look at the price of these homes relative to the rent they generate, they produce almost as good positive cash flow as the condos and town homes partly because the HOA dues are typically much less on single family homes than on attached housing - $100-$150 per month less.  That lower expense coupled with the higher rent is making the single family homes more attractive.  And there are other reasons why I like single family homes over condos and town homes…

(1) At the present time, vacancy rates on single family homes is lower - in the 3-4% range.  Why so low?  Think of it this way. There are literally 10s of thousands of families and individuals losing their homes in the Phoenix Metroplex through foreclosure and short sale.  Where are these people going to live?  They cannot qualify for a mortgage to buy another home because their credit is destroyed and do you think someone living for years in a house wants to move into an apartment?  Of course not!  That is why there is such a current demand for rental housing right now and this trend should continue for at least 2 more years

(2) Rental rates are higher and increasing faster in single family homes.  For similar reason as as what I stated above, there is such a demand for homes as rentals, the supply cannot keep up - even with all the Canadians buying homes as an investment!  As a result, returns are very strong and will likely increase at a faster pace than apartments and attached housing.

(3) Liquidity is better with single family homes than with other forms of investment real estate.  Although real estate has long been known to be a very illiquid form of investment compared to other types of investments, within the realm of real estate, single family homes is the most liquid type of option.  the greatest demand for real estate is in housing.  This is followed by condos and town homes (attached housing), followed by multifamily (apartments).  After that comes land, retail, industrial and office investments (in no particular order).  There are just more people looking to buy homes and have the ability to do so compared to these other forms of investments - even attached housing (because of its difficulty to obtain financing).

(4) Financability - Single family homes are the easiest form of real estate to finance.  This also leads to its greater demand among buyers of all kinds.

Now don’t get me wrong…attached housing is still an excellent investment, particularly if you have less money to invest.  And there are still excellent opportunities in this market segment as well with excellent upside.  But all things being equal, I would gravitate towards the single family homes as an investment first due to all the factors listed above.

So the next critical question is, ‘where can I find these opportunities and which areas are the best to invest in?’

That’s a GREAT question.  There are MANY areas across the Metro Phoenix market where you can find these opportunities.  Most are on the fringe areas but there are some areas closer into town.  I tend to prefer area close to highways and employment centers as they will be easier to rent and will likely appreciate quicker due to their proximity to jobs, entertainment and other city-needed access.  I know of some pockets of town that are ideal and fit this criteria but I can’t share that info openly - especially on such a large forum as this!  That information and knowledge is reserved especially for my clients so if you’re interested in purchasing homes in great parts of Metro Phoenix for 65-75% off their market highs from 2006 that potentially generate 10-15% cash-on-cash returns, give me a call or check out my website for more information. www.CanadiansBuyArizona.com

Take advantage of this once in a lifetime buyer’s market while blood is still running in the streets!

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The Early Scoop On March 2011 Phoenix Housing Numbers

April 22nd, 2011

Well….The March housing numbers for the Metro Phoenix area are starting to trickle out and the news is mixed, my friends.  The numbers are VERY strong with well over 10,000 resales for the month - the highest single month total in over 5.5 years.  The overall resale housing inventory is also down due to less new listings, dipping below a 4 month supply of homes for sale.  This is very positive news for the housing market in general and figures I wasn’t expecting to see until later this year.  If this trend continues for another couple of months you should begin to see a bottoming out of the drop in median home prices and perhaps a slight rise earlier than I expected.

So why do I say the news is mixed if these figures point towards positive housing results?  Because I have comfortably settled into assisting many investors purchase extremely inexpensive homes across the Valley - particularly the SW Valley areas.  If this trend continues for much longer, it will make my job of bargain hunting and bottom feeding much more difficult with more investor/buyers chasing fewer and fewer homes.  If you’ve been thinking about diving into the housing market in Phoenix, now is the time my friends.  I don’t think you will find a better opportunity than exists right now.  We might actually be slightly past the prime is inventory starts to dry up making my job to find viable opportunities without getting into bidding wars much more difficult.

What about the possibility of a double dip recession? Sure…it could happen.  But I’ve heard more about inflation and even hyperinflation occurring as the government prints more money and commodity prices spiral out of control.  We’ve already seen the Cdn$ reach unprecedented highs, now sitting at $1.05US.  And what types of assets and investment perform well in an inflationary environment?  Real  consumable goods, commodities and real estate, of course!  And keep in mind that Phoenix was one of the first market to enter this housing crisis so while other markets could still be feeling the pinch of corrections, we have really been scraping the bottom of the barrel here with our housing affordability index reaching all-times highs of over 85% (over 85% of the residents of phoenix can afford to buy the average home in the city.  The historical average is 65-70% and LA sits at around 25-30%).

Time to get in the game before it’s too late!  Check me out at www.CanadiansBuyArizona.com and contact me about how to get in before it’s too late!

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Metro Phoenix Market Update - Distressed and Depressed

March 25th, 2011

Well there is some good news that has showed up from analyzing the Feb 2011 housing sales numbers.  Overall inventory of listings is heading downwards, Overall number of sales is higher and distressed sales has also slipped a little.  Is the housing market showing signs of strengthening?  I think it is a little too premature to say for sure if this is a blip in the statistics or the beginning of an overall strengthening trend.  We’ll have to see how the next few months play out.  Based on my own feel of the market, I think we are a bit early on market strengthening but there is no way to gauge these trends accurately - it’s only after the fact that you can identify when the true bottom or top of the market was.  I have been on record in stating that we are swimming around market bottom right now and that only towards the later part of this year will we see signs of market strength pulling us very slowly out of that bottom.   Who knows?  Maybe we’re a bit early.

In any event, there is certainly many ways to look at the real estate market but the most important thing to remember is to get in at or near the bottom, which is where we are.  Don’t procrastinate or wait it out only to miss the mark and then find it difficult to buy a home because inventory levels are shrinking and competition is increasing - the first signs of a market recovery.  If the statistics from Feb duplicate themselves for another 2-3 months, we might be able to say that the market is moving in the right direction which makes it much more difficult to get in and snag good deals so don’t hesitate!  Get in the game before it’s too late!

As for the specifics of the February statistics:

Total active listings dropped 2231 units  from Jan to Feb

Sales are up to 7725 for the last month

We currently sit at a 5.2 month supply of homes for sale in The Valley - slightly above what would be considered a normal, balanced market.

Distressed Sales Stats:  Short Sales represent 21% of the closings and 38% of the listings for a 9.8 month supply.  The total for distressed properties is 66% of sales for the last month which is down 5% from the month prior

Feb of 2011 closings were 6535  vs. 2010 6158 which equates to a 6% increase over last year.  And remember, last year, sales were fueled by the homebuyer’s tax credit which artificially inflated sales numbers until April.

The strongest market segment in the Valley continues to the the SW Valley with under a 5 month supply of homes for sale.  I believe this is being driven by affordability and quality (newer homes for low prices).

Stay tuned to my blog.  My next one will be why I am heading a shift from condos and town homes to single family homes for my real estate investor clients.  It is an import shift that will potentially make you more money with less hassles down the road.  Look for it within the next week and keep up to date with Phoenix market goings-on at www.CanadiansBuyArizona.com.

Cheers!

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Cross Border Issues for Canadians Buying Real Estate in the US

February 17th, 2011

Wow!  This is a hot topic and most Canadians buying real estate in the US are asking questions about the tax and legal implications of doing so.  While I am NOT an accountant, attorney, or cross border financial planner, I do have a slight amount of knowledge in this area (slight enough to be dangerous).  I recently attended a workshop by Keats, Connelly and Associates, LLC - a firm specializing in cross border planning issues.  I am providing this overview of their workshop to give you a little knowledge and get you started in planning how to best purchase real estate in the US.  Of course, every person or family’s situation is unique and none of this information is a substitute for obtaining a personal snapshot of you situation and the best way for you to proceed.  For that, you need to speak with a specialist. And by that, I mean a cross border planner that is familiar with tax and legal implications on BOTH sides of the border.  Let this serve only as an initial reference point for you to get started.

There are 2 ways in which you may purchase real estate in the US - directly or indirectly.  Directly would be owning the property in your individual name(s) in joint tenancy or community property.  This form of ownership is easy to arrange, does not cost anything to set up or maintain but leaves you open to US estate tax and probate, potentially.  If you decide to use this form of ownership, consider using beneficiary deeds whenever possible to transfer property after death.  This type of ownership is NOT ideal for properties that produce income.

For income producing properties that you purchase, your options include (1) Canadian corporation which is not generally used due to double taxation and other issues, (2) Canadian Trust which can also cause double taxation and is generally not used, (3) Cross Border Revocable Living Trust which is generally used on larger home purchases of over $750,000 and offers protection from creditors and avoids probate. These are structured by cross-border attorney, (4) US Living Trust - there is nothing similar to it in Canada and not needed as Beneficiary Deeds can accomplish the same function when available, (5) Limited Liability Company (LLC)  SHOULD NOT BE USED as they are not recognized in Canada and subject to double taxation, (6) Limited Liability Partnership (LLP) allows for limiting of liability and is recognized in Canada.  Use when property will be used for business purposes like rental.

Some additional important issues to be aware of on rental real estate owned by non-resident aliens (that means you, Canadians!).

  • there is a DEFAULT 30% withholding on GROSS rents, BUT…..
  • An election can be made to withhold on the NET rents due to US/Canada tax treaty
  • Depreciation must be taken in the US whereas in Canada it is not required
  • Owner will need to file Form 1040 NR by June 15th and file W-8ECI - this filing does not apply if property is owned by an LLP or other entity
  • REMEMBER: Rental income is not earned income, it is INVESTMENT or PASSIVE income
  • While technically, Canadians cannot be employed in the US without proper documentation, you can probably get away with fixing up your own property unless you are running it more like a business.
  • An umbrella insurance policy may not (probably) cover your Canadian assets.
  • With vacation or 2nd homes, here are no tax return filing requirements until you sell the home.

Foreign Investment In Real Property Tax Act of 1980 (FIRPTA) states that if a buyer purchases a home for $300,000 or less AND intends to occupy the property themselves, withholding is not required on the sales proceeds.  Otherwise, FIRPTA requires 10% withholding on the GROSS PROCEEDS, unless Form 8288B is filed, then 10% withholding on the “adjusted gain”.  This form must be sent in BEFORE the closing.  A W-7 application for IRS Individual Taxpayer Identification Number (ITIN) should be filed with 8288B.

Some of you may be aware that the IRS allows Americans to defer taxes on real estate using something called a 1031 tax deferred exchange.  Well…Canadians DO NOT have this option apparently so be careful!

When must Canadians file US non-resident tax return ( 1040NR)?  After the sale of any real estate owned and held in the US and/or annually if property is a rental.

Another point of interest:  The US-Canada Treaty allows for pro-rata estate tax credit.  Depending on the size of your US real estate holdings, you may want to employ an attorney to assist you with avoiding probate and estate tax issues.  Best to work with someone familiar with both Canadians and US legal issues.

And finally, for investment properties only, the Bureau of Economic Analysis (BEA) which is part of the US Department of Commerce, requires information for statistics relating to FDI (Foreign Direct Investment) in the way of 3 forms: BE-605 (quarterly), BE-15 (annual) and BE12 (5 yearly review).  These forms need only be filled in ONCE.

Again, let me reiterate that EVERY PERSON’S financial picture and plan is different so this information is only useful as a general guideline and the requirements and laws change OFTEN.  Therefore, depending on how complex your cross-border plan is and how large and many properties you are buying, it may be advisable to consult with Cross-Border Planning Specialists and cross-border attorneys.  Please use this information as general reference and to guide you on the right path of where to go to obtain further, professional help.  DO NOT take it as an end-all of information for Canadians.  I hope you find this information helpful and you will find recommendations for cross-border planners at my website at www.CanadiansBuyArizona.com.

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Real Estate Market Outlook: 2011 - Still Distressed & Depressed

December 10th, 2010

I recently attended Arizona 2011 - Real Estate and Business forecast which had a number of excellent featured speakers including Elliott Pollack, renowned economist from the Phoenix area.  I’d like to share with you the overall sentiment as well as the analysis of various real estate and business sectors.

First, Elliott started of the show with his signature analysis of the local, state and national economy.  The overall consensus was that we’re looking at another year of stagnation in 2011.  In other words, 2011 will resemble 2010 in most ways - abysmal.  The year to year improvement will be minuscule.  As we move forward, 2012 will be better than 2011 and so forth but we won’t see an marked improvement and substantial growth until 2013-14 when things should start to return to normal.  Everything is predicated on the national economy improving and while there are signs that things are improving ever so slightly, we are still a few years away on that front as well.  Of course, so much is dependant on what happens nationally and even moreso, globally with the economy.  Elliott went on to point out that Phoenix has historically suffered from emphatic boom-bust cycles and that we are poised for another boom cycle.  All the indicators point towards to future population and employment growth as we move forward which will support our housing market.

Moving on to some of the other speakers and specific real estate market segments, the concensus was that residential housing is near or at bottom.  Will probably get slightly worse next year as more foreclosures hit the market and must be absorbed. But we are already at rock bottom pricing so can’t go much lower.  This means another year of tremendous housing affordability and ability to find incredible value for housing and investment.

Apartments are the first real estate product type in the investment sector to show improvement and signs of upwards movement.  We are pretty much at the bottom for apartments. Class ‘A’ and ‘B’ apartments didn’t really suffer too badly in this recession and there are signs that they are improving.  Rents are up and concessions are down in these asset categories which positively affect cash flow and market value.  There are simply more potential buyers for the nicer product than there are buildings for sale.  I can personally vouch for this as I have been involved in numerous bidding wars for quality assets in good locations.  This invariably means someone is willing to overpay, usually.

Class ‘C’ is being neglected in a big way right now and that’s where the sales inventory is located.  Too much inventory and not enough buyers means downward pressure on value and pricing.  It is getting to the point where some lenders are willing to dump properties to get out from under them.  This is also the sector affected by the highest vacancy rates in the 20-25% range because they are invariably in the areas affected by the SB1070 legislation that scared alot of Hispanics out of the city and across the border.  Some of those areas in Glendale, West and central Phoenix have been decimated by vacancies as the rental pool has shrunk.  What this means is that there is now an opportunity to purchase real estate assets for cents on the dollar and benefit from the end of this temporary crisis.  This is probably where some of the best deals are located but they need experienced investors that understand how to turn a property around.

Apartment financing is available and getting better.

Industrial is the next real estate asset class that is set to recover.  Still a couple of years away, but there are signs that it is bottoming out and positive absorption is starting to edge down vacancy rates.  Retail and office are still light years away from recovery and should only be touched by the most experienced and knowledgeable investors.

We also had a speaker that talked specifically about the residential rental market.  Single family homes and condos as investments.  He stated that he is managing more homes than ever and vacancy rates are lower than he has ever seen and rents are moving up.  He manages over 900 homes and has a 4% overall vacancy.  What’s driving this sector is the number of homeowners losing their homes in short sale and foreclosure and in need of rental housing until they can repair their credit.   The best residential housing markets for investments are where the newer subdivisions were built from 2003-2007 on the fringes of the Valley.  Even as far out as Buckeye.  So, where we are positioned and selling alot of homes as investment is ideal - Avondale, Goodyear and surrounding areas.

As it stands with any type of investment,if you hang aroun and wait for the indicators to show a turnaround, you are already late.  You have to be able to anticipate what’s happening with the leading indicators and jump in before everyone else.  It’s really not that risky if you make sure to stick to buying properties that have positive cash flow.

So when are we going to see an upswing of housing values?  My thoughts are 2-3 years and once it starts, it will accelerate fairly quickly (NOT as quickly as the last boom).  Why? because we will have ALOT of homeowners that lost their homes and have repaired their credit so they are ready to re-enter the housing market.  Couple this with an improving economy and more people moving into town and our oversupply of housing should be gobbled up pretty quickly.  Prices will have to escalate enough to motivate the investors to sell their inventory so I think you could see a run-up of values in the 20-30% range within a 2 year period when this market segment re-opens(or until cash flows turn from positive to negative on single family housing).  Once it is tapped out, I expect values to appreciate a more normalized level of 2-5% per annum.  That’s just my opinion.

Now lets briefly examine the last few months of sales activity for residential housing.  After monthly inventory increases in Aug and Sept, the market showed signs or restabilizing in Oct and leveled off and improved slightly in November (speaking about overall inventory levels).  Prices have softened a bit further in the third and fourth quarter of this year, but not significantly.  I expect a slow improvement beginning in January when everyone gets back into the swing of things.

The bottom line is there has never been a better time to buy residential housing in Metro Phoenix (being selective).  Astounding affordability and positive cash flow on single family homes in a major US metro market makes now the time to get involved and snap up properties to reap the benefits over the next 5-10 years.  Don’t wait until it’s too late.  Let us help you acquire a portfolio of real estate that will make you money now and appreciate well into the future. We’re here to help!!!

www.CanadiansBuyArizona.com

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Canadian Real Estate Market In Distress? Time To Move Assets To Bottoming Out Real Estate Markets Like Phoenix

November 18th, 2010

Every hear the expression, ‘Buy Low Sell High’?  Well…..

Phoenix real estate is low.  In fact it’s probably near rock bottom and….
Canadian Real Estate Markets are out of control on the high side with signs of coming down.

And as an added bonus, because of the US’s idiotic monetary and fiscal policies, the Canadian $ is trading almost at par with its US counterpart.

So what does that tell you?

Most people make the common mistake of holding onto investments too long either hoping that things will continue to get better or that they can somehow ride out the upcoming correction.  When property values make no sense (in other words, when prices get so high that the majority of the population cannot realistically afford them), it’s time to sell and move your investment capital to distressed market when the correction has already occurred.  In out case, Phoenix, Arizona and other similar distressed US real estate markets in Florida, Nevada and California.  The advantage to Metro Phoenix to these other areas is quite significant which is why I have been stressing to investors to dive in now while the getting is good.  Wait too long and not only will you miss the opportunity, but you could lose a significant portion of your portfolio value if the Canadian economy does go through a correction of some degree, which is looking more and more likely.  Read CNN’s latest article on the matter here. 

This is one of the few times in our lives when MASSIVE wealth creating occurs for the intelligent few that can read the signs and make the right choices.  On the other side of the equation, it is also the time in which the masses of people lose a significant portion of their savings and investment portfolio that brings equality to the masses.  Remember, everyone cannot be rich at the same time.  It is impossible from a fundamental point of view - there always has to be a few wealthy people and the rest are either scraping by or poor.  When the system gets out of balance, an equalizing event must occur which is happening globally right now.  We are in the midst of one of the largest financial equalizing events in history.

It takes Chutzpah (guts) to make the tough decisions to move your investment around when everything looks fabulous, but if you spend some time looking around the globe, most countries are feeling the financial pinch in a very bad ay - especially the developed countries.  Do you really think that Canada can evade the inevitable forever? 

So here I am pleading with you not to make the mistakes that 99% of investors make by holding on too long and missing out on one of the most incredible opportunities of your lifetime.  Get off the bandwagon and make the tough decision and reap the rewards.  Let me help you invest in one of the most depressed real estate markets in North America that has some of the best upside over the next 2-40 years.

www.CanadiansBuyArizona.com

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Distressed Phoenix Real Estate Market Update - September 2010

October 13th, 2010

Well…as I had previously noted, the market has definitely slowed down over the past 2 months - especially short sales.  Stagnation in the marketplace has increased inventory levels of homes for sale which now stands at a 6.8 month supply, which is trending in the wrong direction.  The good news is that pending sales so far for this month are up which seems to be a reversal of the slow-down trend but we’ll have to see how that plays out in the next 1-3 months.  I actually expect sales to pick up now that the cooler weather is here and the snowbirds start to repopulate the Valley again.

As it stands, prices Valley-wide fell 2-3% in the past 2 months.  The biggest hit in sales occurred with short sales which went from 32% of closings to 24% in the last month.  This had been trending upwards for quite a few months before that.  Why?  I can’t really say aside from perhaps the lenders not wanting to show major losses as year-end approaches.  Distressed properties continue to be the leading market force tallying 70% of total sales for the month.

Total listings are up almost 1,200 from last month with total sales down by almost 600.  This is definitely a move in the wrong direction.  But as I mentioned above, it looks like pending sales are up almost 400 from last month so hopefully this denotes the end of the slide.

So what’s causing this potential double dip in our ravaged real estate market where values are already down by some of the highest percentage as anywhere in the US and our housing affordability is presently the best in the SW US and among the best for major metro areas in the entire US?  My guess is 2 factors - the overall economy is not recovering and continues to stagnate with a large percentage of the population believing that it’s not getting better (many believe it could still get worse - thanks OBAMA!).  If you look at overall unemployment, not just the propaganda number supplied by the government, I think this recession is alot worse than has been disclosed.  In fact, when all is said and done a few years from now and we are out of it (God willing), it will not be referred to as “The Great Recession”, but as “The Second Great Depression”.  That’s just my thoughts about it.  I continue to see people lose their jobs and the pessimism out there.

The second factor is lack of mortgage credit.  Between potential homebuyers having poor credit due to losing their homes and other items, and mortgage lenders just plain scared to lend money, there is not enough financing out there to help support the housing market.  If there is one thing the Government could do, it would be to put the screws to banks and lenders to get out there and actually LEND!

So…is it a good time to buy, should you sell because it’s going to get alot worse, or should you just hold because it’s going to get better?  If you own real estate, DEFINTELY HOLD.  If you’ve bought in the last year or 2 you should b getting positive cash flow so you can ride out this crisis and hopefully see the light at the end of the tunnel which will be substantial capital gains over the next 5-10 years (we all hope).  If you’re thinking about buying right now, DIVE IN.  The uptick in inventory has done one thing that is good which is give buyers more options of homes on the market to pick from with less bidding wars.  Could prices go down further?  It’s possible but I don’t think it would be substantial and we’re already seeing a change in the market which looks like stabilization.  Prices are already so low and below replacement cost that you really can’t go wrong.  The emphasis should be getting in near bottom, not AT bottom because it is impossible to time exact market bottom (or top, for that matter).  When prices return to $200,000 are you really going to be upset because you could have bought the home for $87,000 instead of the $90,000 you paid?  You’ll only be kicking yourself if you kept on the sidelines waiting for true bottom only to miss it and then never buy anything.  That will deserve a real hard bruise to your derriere!

Don’t just think about it…DO IT,DO IT, DO IT!!!!

Lots of new articles posted on my website to keep you up to date with the market.  Be sure to keep checking back.  I will also be going to a new video blogging system shortly, so stay tuned!  www.CanadiansBuyArizona.com

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Distressed Property Fraud

September 27th, 2010

I attended my office meeting in which we had an interesting guest speaker - A member of the FBI mortgage fraud division.  She went into the latest types of fraud cases they are working on in the current depressed and distressed real estate market.  The first interesting fact that came out of the presentation is that only 7% of homeowners that seek loan modification get  relief.  That means that all that hype by the federal government and banks to help distressed homeowners is not doing much at all.  This is leading to alot of fraud by ‘loan modification companies’ and even lawyers collecting fees promising underwater homeowners some kind of relief.  Apparently, the FBI is going after this hard in California (especially lawyers) and it wouldn’t surprise me if Arizona is high on their watch list.

Another area of concern are companies offering the general public a way to participate in Foreclosure auctions on the courtyard steps through an intermediary.  There are a number of companies that are offering a service that you can use by registering on their website.  Apparently, according to the FBI, there might be some deceptive or fraudulent practices going on there.  She didn’t want to elaborate because it involved an ongoing investigation so I cannot comment further other than to say, be careful where you tread.

As a buyer, I would just recommend that you exercise common sense and good judgement when purchasing real estate and try to do unto others as you would have them do unto you.  Exercise the cardinal rule and you’re guaranteed to be fine in the long run.

Market stats for Aug will be posted shortly on my website, www.CanadiansBuyArizona.com.  Stay tuned……

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