Sacramento Real Estate Reflections

Q:  Buying or renting – which is best?
A:  Sometimes I am asked if it would be a good idea to rent instead of buy as the market levels off.  A recently published National Association of Realtors brochure gives some interesting stats: 

Over the past decade, the cost of rental housing in the United States has increased an average of 3% per year.  That cost is now moving towards 4.5%.
In contrast, a $210,000 home purchased today with a down payment of $10,000 and a 30-year fixed rate mortgage at 6.5% would yield a net appreciation of $138,521 after 10 years, assuming an historic 4.5% annual appreciation rate.  CA stats are even better—see back article.
If you want to accumulate wealth, then owning a home is probably your best choice, even in this market.  

This was sent to me by another agent – I thought it was helpful content and visiual creative.

As you all know, the real estate market is sloo_o_w_i_n_g down across the USA, and specifically in California.
The reason seems to be Buyers’ FEAR of

T
U
MBLING housing price$, due to *so many* homes being For Sale.

This little quiz might help you get a new perspective on the current real estate market.

Quiz: (yes the answers are below)

Q. What was the single biggest annual percentage D_rop in the California Median Home Price?

A. 4.5% That’s all…..can you believe it?

According to the California Association of Realtors, since WAY, WAY back in 1968 (38 years),

in only 7 years did median home prices GO DOWN !!! (1993, 1995,1992, 1994,1990, 1996, in that

order, oh and 1984 was teenie)

Q. How many years WAS the longest streak of consecutive annual percentage drops in Median Home Price?

A. If you were paying attention, the previous answer holds the key. Only 5 years and during that time…..

THE D.o.D Closed 32 bases in California from 1988-1995, with a loss of nearly 100,000 California jobs.

Tearing all those jobs out of good ol’ CA’s heart was CLEARLY A ONE-TIME EVENT. (If you don’t agree, take a lunch break, then start again)

And…. PILING ON the HURT… Between 1990-1996, interest rates on 30 year fixed rate mortgages ranged from 7.2% to 10.5%.

Q. What was the total drop in California Median Home Prices for this (longest) 5 year __streak__?

A. In the worst series of value drops in recent California history, homes only lost 13.2% –

is that ALL??

Contrast that with 12 of the individual years since 1968 had more than 13.2% appreciation!!

And MORE: 3 years after the (longest) state- wide downturn was over, prices were up 21%.

Q. What was the HIGHEST annual percentage increase in

California Median Home Price$?

A. 28.1% – What? Twenty-Eight.One Percent? Do you know what Kansas is? Maybe 10%?

Q. Guess which year had the ^highest annual appreciation?

A. 1977 – …………….you thought it was during the last 5 years?.

One More Thing,

after a 6% drop from June 2005 to June 2006, how much further do you think prices will fall before the market changes?

Have you changed your perspective on the current California real estate market?

As I talk to investors on a daily basis my question to them is, “What are you looking for?” Invariably the response is…, “I’m looking for a good deal!” OR “Let me know if you see a good opportunity.” Here’s my reply:

“There are always good opportunities depending your level of risk and financial position/buying power (ability to get a loan and capital on hand). Here are some of the recent opportunities we’ve worked for our clients:

– We have done a number of transactions where the client gets cash out at closing ($10-50K), with closing costs covered.

– Also we have done a number of short sales where the client buys in with $50-75K in instant equity. These are very good opportunities, however, they take 2-4 months to close as we are negotiating with the banks.

– We have referral programs for sales division and for our property management co.—Ask me how you can benefit and earn money with us.

– We work closely with a few contractors who do property rehabilitation for us where we can maximize the value of a property to flip or buy and hold.

– We can give discounts on our property management (as it is we are one of the best deals in town – $50 / unit). We sometimes give 3 months free for investors, and have even gone up to 6 months free.

There are so many creative ways to find and cash in on good opportunities. Sadly, we find that most people are more in love with the concept, than the reality of launching out and actually investing. However, those that do usually never look back and thank us dearly for the coaching and consultation.

Let’s talk about your next step.

The Buzz

I am thrilled to announce an awesome transition for my business – notice the new logo and new name. I am ecstatic to say that I am opening a real estate brokerage with the partnership of Gary Burmaster. I cannot say enough good things about Gary. He’s an entrepreneur, with savvy business sense; He’s earned a positive reputation, with a strong bent toward investing. Gary has established a thriving property management company and a network of on-going real estate investors. As he began to show me some of his systems and business tactics he said, “I feel like I’m training my competition.” I gave him an indifferent nod. Later he suggested we open our own office and share the benefits and strengths we both bring to the table. Did I mention… We both enjoy the characteristic of being decisive – The rest is history. As a bonus, we have already employed two skilled agents to join our team.

Together we now offer a greater array of real estate services:

1) A team of 4 strong agents with abilities that rival their peers.

2) Residential buying and selling specialists

3) Investment Property Consultation

4) Portfolio Stewardship

5) Expertise in short-sales, REOs, foreclosure properties

6) Property Management at the most competitive rates

7) A hard working support staff that do not let details fall between the cracks (Administration, Escrow Coordination, and 2 full-time property managers)

8) Business affiliates that are dedicated to assist us in offering the best services, the highest value, at the most convenience to our clients

9) Property Rehabilitation

10) Understanding and insight into creative financing and capital leverage

If you are in the area, please drop into our new office space:

650 Howe Ave. #1030

Sacramento CA 95825

[Turn right off Howe onto Sierra; turn right into the second parking lot]

Also see our website at www.BurmasterRES.com check back often, as it is in the process of being renovated and updated. I think you’ll like the changes. Please use my email KeithKlassen@sbcglobal.net, as I am no longer at my former address(es).

Everyone I’ve talked to about it has about a dozen different questions for me revolving around this change. Feel free to call or email me if you want to know any juicy details.

Real Estate Currents:

I am seeing a return to normal in the real estate markets. New home sales rose 4% in April while the sales pace of home re-sales slowed 2%. Inventory rose by 5.8% nationwide. David Lereah of the NAR, who I quote from time to time, says that the housing nationwide peaked last August and believes that this spring marked the bottom.”

It is difficult to predict the future but “Location” still holds the trump card. Lereah also reports that new home sales are slowing in Florida and Arizona and gaining momentum in Texas, the Carolinas, Ohio, Utah and New Mexico.

Housing in some areas is slowing because of rising mortgage rates and falling affordability. Mortgage rates for 30-year fixed rate loans averaged 6.51% in April, up from 6.32% in March and 6.25% in February. Many predict that the Feds will not raise the interest rates again at their June meeting.

Now more than ever, it is best to give me a call if you are thinking about a move. My finger is on the pulse of our market and I am here to serve your needs.

Just Ask
Q: Is there anything I can do to add quick value to my home?

A: If you are looking to quickly increase your home’s value, consider these options:

Add or renovate a bath: Adding a bath is one home addition that will almost always result in increased home value. If you do not have space for a full add-on, consider updating the shower and bath, replacing linoleum with tile, and throwing on a fresh coat of bright paint.

Make more with less: Many homes have space dedicated to playrooms and office space. If you are in the market to sell, quickly convert these areas into a smaller bedroom by adding a partitioned closet (easy and inexpensive). Go the extra step by moving a wall if possible to create a Jack-and-Jill bathroom with a neighboring bedroom.

Add some character to the kitchen: Updating appliances is guaranteed to make your kitchen more appealing but it can be pricey. Small touches such as rustic cabinet handles and a new varnish for the cabinets can also make an impressionable difference.

My Town
June, with the longest days of the year, often connotes time spent outdoors with friends and family over glasses of chilled wine or iced tea. It’s a month when we want our backyards and patios to be inviting and comfortable. On long, hot summer days, however, some of us realize that we need more shade to cool us down and keep down the glare. Here are some online resources I thought you may find useful to find several different options:

www.patioumbrellas.com – This site only sells umbrellas: cheap ones, high end ones, small ones, large ones, commercial ones, tilting ones. You name it, they have it.

www.landscapeforms.com – With butterfly to wavy shaped umbrellas, this company creates customized umbrellas to fit your taste and backyard landscaping.

www.costco.com – Click on Outdoor, then choose Awnings, Shades and Umbrellas to see a great selection of shade creating options from retractable motorized awnings to beautiful canopies. You may feel like you’re at a resort in your own backyard!

I hope these have been helpful. It doesn’t cost a lot of money to create some additional shade in your backyard and make your summer a more enjoyable one.

FYI
Summer is synonymous with lawns. Big, green lawns. Did you know that your lawn needs to be aerated on a regular basis to alleviate compaction? To keep the spring in your lawn’s step, hire a specialist or rent a power-driven core aerifier with hollow tubes at a home renovation store in your area. By aerating your lawn once or twice a year, the soil will have more oxygen and the faster growth. You will notice a lusher lawn in no time.

Last issue I didn’t put any pictures of my kids and one person commented, “Where are the kid’s pictures – that’s the best part!” I just laugh – they are some of the cutest kids in town and I’m a fortunate father to say the least. Best to you and your family.

Personal Update

As you may know, my growing business is built on insight (understanding), integrity (honesty), and experience (in real estate and life). It flourishes by working with quality people as yourself and those you might refer. Let me earn the business of your freinds and family by demonstrating top shelf service. Thank you in advance.

For some entertaining reading on my experiences as a Realtor and investor, opinions, practical advice, and unconventional wisdom in real estate, check out my professional blog at http://reflectionsonrealestate.blogspot.com/

I look forward to hearing what’s new in your life – talk to you soon.

Best,

I work with investors, some seasoned and many who need an education. Those that desire to buy income property but don’t really know what they are getting into, I wade through extensive consultation. I attempt to get at the person’s hopes and goals for owning income property. The general response is usually “I want income!” Or said in another way, they have the hope of the cash flow. They want a property that will pay all their expenses and have money left over for themself (every month). This expectation (at least in CA) is usually unrealistic. I find that this person not aware of all the expenses, like management fees, lease up costs, maintenance, vacancy, etc. The typical hopeful uneducated investor usually at this point is rethinking their hope of owning income property – they get nervous about the cost and responsibity.

At this point I try to take another angle. I suggest that income does not necessarily always come in the form of immediate cash flow. In California, one is more likely to see income growth in the form of appreciation in equity. Even if a person begins with a slightly negative cash flow it may still be a great investment. I love the 401K scenario. If you think about it, this is a negative cash flow investment. You invest a certain amout out of your pay check every month to have a growing retirement fund. Many times an employer will pay a percentage of that invested. Let’s say your employer is

I must preview and show a dozen homes every week. Especially with some of the older homes, there are always some funny and unusual things about the home. Whether its a bad renovation or a funky decorating scheme or an odd fixture of some sort, my attention to detail and quirky sense of humor likes to point out and identify these things. Since I have my camera with me most of the time, I just can’t resist capturing some of these images. I frequently will include some of these in the blog from time to time.

I got a kick out of these people’s attempt to cover their “beater” pick-up in the driveway.

For the locals, here is another article / advertisement from my neighborhood newletter.

You may drive past this local antique shop on a daily basis, but have you stopped to take a look? The Antique Company Inc. is filled with great furniture, especially for the period homes of Curtis Park. Steve Sylvester, owner and resident of Curtis Park, says, “[We] … bring in European antiques by container every two months and specialize in items from between the two world wars. Whether it is Art Deco, English Cottage Style, Jacobean 1920’s or Danish Modern, we have a huge ever changing selection all the time. We are known for our huge range of stained glass windows, 1930’s mirrors and garden ironwork. On the corner of 21st Street and X Street we have a large 6000 sq foot store that leads to a small garden center and another 1000 sq foot store. An eclectic maze!” You will be intrigued from the moment you walk in – Go see for yourself.
The Antique Company Inc. is located at 2100 X St. and is open every day of the year from 10am – 6pm.

Here’s an article I wrote for my neighborhood newsletter, called “Front Porch”

Some of you have asked me about the significance of the newsletter’s name. The name, for me, evokes a feeling and concept that many of our homes already have built into them – the front porch. The front porch can be the equivalent of an outdoor sitting room, a place for discussion and relaxation. As I walk the streets of our neighborhood I see people barbequing, reading, playing with their children, writing and even conducting business on their front porches. I might catch folks just sitting, gazing at the street or in the trees, entertained by a bird or squirrel. The front porch welcomes the passer-by. It invites conversation between neighbors. Between the rise of the front porch in the middle nineteenth century and its decline in the post World War II era, the front porch developed a cultural significance. It represented the cultural ideals of family, community, and nature.
Some of our friends who live in the “burbs” lament, “Our neighbors just open their garage, pull in, and you never see them. Or, “Everyone hides out in their backyard.” And, “We still don’t know many people on our street, after all these years.” What might be missing from these homes is a front porch—or at least a “front porch attitude.” Granted, this home feature can’t guarantee a gregarious disposition in life or an abundance of open, friendly neighbors, But it is a start. Why do you think the street side cafés and coffee shops with outdoor seating are so popular? They have, in a sense, replaced the front porches.
Is your front porch lying dormant? You may not be the one who throws a block party or makes friends with everyone on your street. But how about this for a modest start at getting to know your neighbors? Dust off those beautiful Adirondack chairs (or just a folding chair will do) and become a part of the front porch culture in our neighborhood.
A while back, I received an email from a friend in the community saying, “We came by to visit today, but you were not home. Hope you don’t mind, but we just sat on your front porch for a while and enjoyed the neighborhood. We may be back soon, even if you are not home. Thanks! “
While my day job consists of real estate investing, consultation, and property management, I’m also striving to help draw our neighborhood together. So, whether you have one or not, you can still enjoy the ethos and attitude of the front porch. See you soon … on the front porch.

Here is a summarized list of the Top 10 things learned in a decade of growing a local news business.

(With my interpretations in italics)

1. Start small and grow as conditions warrant.

Lead with revenues and don’t bite off more than you can chew.

1. Mail to every home in the neighborhood

Don’t assume some won’t give you business, be it stereotypes or first impressions.

1. The monthly publication cycle is ideal

I translate this as consistency.

1. Hire the best people you can find and treat them well.

1. Keep news focused on the positive.

This might be viewed in other business situations in the way you motivate those around you OR in relation to your own attitude.

1. Design is important

Your product needs to be both useful and beautiful.

1. Have someone trustworthy manage the money.

This seems like a no-brainer, but I guess many don’t heed this advice?

1. Don’t let the customer mistreat the staff

1. Be open to ideas but follow your own instinct

Have a business plan and model!

1. Be grateful to your customers and employees

You are never too big for britches. Usually there are many in your network that assisted you in success – Take of and reward those in this sphere.