Fairfax Living Real Estate Blog

I find the Wall Street Journal to be a useful source of information for all sorts of reasons. The Washington Post is just bird cage bedding on most days but the WSJ is still a good source of information. Today in the Personal Journal section a front page article titled "What Facebook Can't Give You." In this day and age when everyone is abuzz with social networking (I am in it too), the good old fashioned networking of the past still works. The article is about a group of men who used to meet regularly to discuss business and exchange referrals and have been doing to since 1957.

Social networking is fine to reconnect but there is something about meeting someone in person that helps you evaluate them and get a warm and fuzzy (or just the opposite). I prefer to network in person rather than over the phone or even on Facebook. Facebook just reminds my "friends" that I am out there. We made our connection long ago in person.

What Facebook Cant Give You

It is believed according to marketwatch.com that the next 6 to 9 months are considered to be a prime time for buying real estate. In addition to the incentives, such as the homebuyer tax credit, the job market should improve over the next few months.

Despite the month to month ups and downs, Ken Rosen, A real estate economist in San Francisco, suggests that he worst is over and things should improve rather quickly over the next 6 to 9 months.

The video is about halfway down on the page. Here is the link to the page...

A Good Time To Buy A Home

I am in the process of joining BNI for the second time. I changed professions awhile back and now I am in the group as a real estate investor as the Realtor position had been already taken. Our BNI (Business Networking International) Group, Chantilly True Grit, is up to about 20 members and we are looking for a commercial realtor. We are also looking for a Chiropractor, Interior Designer, Public Relations Consultant, Residential IT Specialist, Personal Trainer, Promotional Products, and a Printer. There are other professions that are availalbe. Please contact me if you have any questions in that regard.

The Chantilly True Grit meets at the Washington Dulles Hilton every Tuesday morning at 0800-0930. The Hilton is located at 13628 Park Center Road, Herdon just off of Rte. 28. Note that your GPS will tell you to exit at Park Center Road. The exit doesn't exist. Please exit at McLearan Road whether you are going North or South on Rte. 28.

Here is the link for the directions: Hilton Washingon Dulles Airport

Come be my guest, talk about your business, and I'll cover your breakfast.

I look forward to seeing you next Tuesday.

Best of Success,

Tom Robinson

Nice news. In fact US Equities are way up on the stock exchanges due to this welcomed news and the U.S. dollar may get a bit stronger over this news. It used to be that whatever happened to GM is what happened to the U.S. economy (paraphrase of famous quote). Now, it is the real estate sales industry and the new home construction industry that drives the economy. Check this link out from Marketwatch.com.

Existing Home Sales Increase

Just received a News Flash that for the 3rd Quarter, 14.41% of mortgage borrowers are more than 90 days behind on their payments. As much as I would like to get back to some sort of normalcy in real estate sales (i.e. - Mr Buyer and Ms. Seller), the situation presents opportunities in strong rental markets to work with investors and first time home buyers to find good properties at relatively low prices.

Marketwatch.com - Delinquencies, Foreclosures, Break Records!

By now, I suspect everyone has heard the news that you can buy a decent single family home in Detroit for, in some cases, less than the price of a used car. I recently read an article in the Nov 2009 "Money" magazine titled "Is this a $6,900 Bargain?" It is amost imaginable that a single family home in the city of Detroit has a median price of $7,500. As you might guess, there is an avalanche of investors jumping in to buy these houses, many sight unseen (NOT recommended) unaware of the pitfalls of owning these homes. Some getting in and are underwater and unable to get out. Others are flourishing. Oh, and totally forget flipping....there are just too many of these homes available to even consider and buy, rehab, and flip. Rentals seem to be o.k. though if you get the right property in the right LOCATION (near a college or a hospital, but probably not an auto factory) so that you have an ample supply of rentors ready to pay you rent.

I have pondered doing a deal in Detroit but I do not know the market. I suspect it is much more risky than where I am (Northern Virginia) where good deals for investors are few and far between and usually met with a dozen or more offers (many cash). Unemployment is relatively low here and the rental market is stable if not actually good. My current property rented in 2 days for $1700 per month. You can buy a home here cheaper IF you can qualify for a loan.

The other issue I see with the frenzy in Detroit real estate is finding good available and competent contractors. You might have to shop around and or wait to get the contractor you want. Then there is the issue of finding the right tenant and being an absentee landlord. Here is a real kicker for you, 20% of addresses in Detroit are unoccupied. My opinion: At some point the real estate investors are likely to reach saturation with qualified and available tenants and may be left holding the bag with a property or renting to tenants that are either unable to unwilling to pay rent.

If I were tossed a legitimate opportunity with true potential (the numbers all worked and provided instant cash flow) I might seriously consider a Detroit opportunity....or I might not.

Sometimes there are interesting articles in the publications I read and other times I just want to say "ENOUGH!" This one is about the coming "Second Great Depression" as one of the quoted articles is titled within the context of this article.

America did not become a great country because we said "Oh No!, We cannot build a railroad across the country, that is too hard."

My father worked for thirty years at NASA in Fl and there were times when they thought there was no way they were going to make it to the moon, but they did it. We will get out of this mess and I hope we are stronger for it (i.e.- Start living within our means as individuals and as a nation).

Enjoy the article if you can stomach it.

Just when it starts looking a little better it seems the government is going to step in and tighten up eligibility to obtain a mortgage through possibly requiring higher credit scores and larger down payments for FHA loans.

If this actually happens , it could be devastating to real estate sales (in my opinion) as half of the FHA loans in their current portfolio were initiated in the past year.

Read this link from marketwatch.com

I was looking at the Outlook section of The Washington Post this morning to what appears to be an ongoing series "The 5 Myths of...." Today's topic was the "5 Myths About Home Sweet Ownership." Some I agree with but at least one I do not. To recap the article, linked below, The Five Myths were 1. Housing is a Great Long Term Investment. 2. The Homebuyer Tax Credit Makes buying a House More Affordable. 3. Homeownership is Good For Society Because Owners Make Better Citizens. It's Safe To Buy A House With A Very Low Down Payment. 5. Owning A Home is Cheaper Than Renting One Because You Save On Rent. Number Five is the one I disagree with wholeheartedly. I disagree with the assumption that paying rent long term is a good deal. Perhaps if you live in a rent controlled apartment in NYC or D.C. or you may not be in the area very long (usually less than three years but today's market may justify a longer term for renting). In my experience, and I am a real estate investor, renting long term is just absolutely stupid in most instances. Although the article may be applicable to many home purchasers, if you plan your purchase carefully, and run the numbers carefully (even if you are a homeowner), you can make a fortune in real estate. Not to brag, but as an example of why this article is so wrong especially on #5, I  am still $300,000 ahead today on my primary residence in a down market which I have only owned for 10 years. I made $50,000 on an investment property the moment I went to settlement this past Summer and I plan on doing it again and again and again. The article takes a short sighted view of real estate. It goes to show that you shouldnt necessarily believe everything you read in the paper. Read the article and tell me what you think.

The Washington Post

A few days ago, I was asked by a relative to do some comps on what their home might be worth. I had a fair idea as I had shown homes in the neighborhood, although not similar, they were in the same zip code but were smaller and older. I ran the numbers, found few comps as this was a newer home in a 100 year old neighborhood. I then looked at the tax records as a guide to whether I was on track. I assumed the tax records were about 80% of the resale value which normally seems to be the case around here. Here are the numbers that jumped out at me. In 1967, the home sold for $27,950 and in 1994 for $183,000. The house today taxes out at about $450,000. Local comps and the 80% tax formula rule put it somewhere between $550,000 and $600,000. Makes sense based on homes in the neighborhood.

Looking at the numbers:

$27,950/$550,000 - Thats 5% of what the house would likely sell for today. In forty two more years the house would sell, using the same formula, for $11,000,000. Put that in perspective, real estate is a solid investment, despite the down market. Sure $11,000,0000 in 42 years will be a lot less than it is today and the dollar may not be worth much overall but to achieve the same growth in the stock market you would have to earn around 7 or 8% consistently over 42 years. This does not count rental receipts assuming if this were an investment home. This tells me that real estate should be in everyone's portfolio whether it is your primary residence or an investment property.