Friday, August 28, 2015

Investing in Real Estate - Where is it best?

Investor clients often ask me where it is best to invest in real estate, in the U.S.

This is a tough question, and there is no easy answer: it depends partly on the circumstances and needs of the client, whether the investor wishes to manage himself/herself, where you believe the best prospects for appreciation are, opportunity, future family needs?...

RealtyTrac puts out a good study on their web site (see "RealtyTrac study on rental condition") showing that the best performing markets for rental returns are:

Baltimore, Maryland:  24.82%, followed by:
Clayton, GA with 24.26%,
Wayne, MI: 21.08%,
Pasco, FL: 19.2% .....

The markets with the lowest return on investment are:

New York County, NY, with 2.34%, followed by:
San Francisco County, CA: 3.2%,
then Kings County/Brooklyn, NY: 3.63%,
Marin County, and close behind San Mateo County and Santa Clara County, at 4.31%
... and Santa Cruz County at 4.54%

Return on investment is defined in this study as gross return: rental price divided into the purchase price.  There is a lot more that goes into a more real "net" return: you have to take into account expenses, which include such costs as: - management company, - repairs, - vacancy, - taxes & insurance, - wear and tear on the house etc ...  More on this subject with this "net operating income" link, noted above.
This study does not look at the rental market from the point of view of someone who has owned a place there for a long time, just someone who would be buying right now, in the market as it is currently.  What I mean is that it does not take into account the appreciation of the asset in that location over time.  This can be a strong factor in the buying decision, and an unknown in the future.

Thank you for reading,

Trends: Local prices and graphs.
A noteworthy local non-profit event:  Coalition on Homelessness, SF - ArtAuction15

Saturday, July 11, 2015

Los Altos Below-Market-Housing Update

Los Altos will soon have 17 additional BMR units:

As read in an excellent recent article in the Town Crier by Staff Writer Alicia Castro, Los Altos will soon have 17 additional below-market-rate apartments at the "Colonnade Los Altos" at 4750 El Camino Real (in front of the recently remodeled San Antonio shopping center).  Currently the City has 105 affordable multiple-family BMR units, including 32 rentals and 22 senior units, and 44 second-living units, according to the city's planning services manager, David Kornfield.


The requirements for people applying for these below-market units are as follows:

“Very low income” requirement is $37,250 for 1 person to $57,450 for 5 people.  “low income” requirement limits the range from $59,400 for 1 person to $76,400 for 3 people. (based on the County’s median income of $106,300 for a 4-person household).

The deadline for preliminary applications was extended to the end of July 2015 in order to allow more eligible applicants to participate.  Preference is given in the selection process to salaried employees of the city, the schools and fire department serving Los Altos residents.  Some preference is also built-in the selection process for Los Altos residents and workers.

More info on this subject in the Town Crier of July 8, 2015.  To submit a preapplication for the lottery process, and for full details on the program, go to:  

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Monday, June 8, 2015

Bay Area at Forefront of a National ‘Rental Crisis’

Bay Area at Forefront of a National ‘Rental Crisis’  - A Zillow report  followed by an in-depth view of the current market in the Bay Area, area by area.

There’s no doubt that Bay Area home prices have been climbing steadily since the recession, but as it turns out rental housing costs are going up even faster and it is creating what Zillow calls a national rental crisis.

Rents all across the country are going up faster than home prices, and they’re going up in our region faster than anywhere in the U.S., Zillow reported in its latest rent index.

In the five-county San Francisco metropolitan area, the Zillow Rent Index soared to $3,162, up 14.9 percent in April from a year ago, the fastest increase in the nation. And who was number two? The San Jose metro area, where the Zillow Rent Index rose to $3,287, up 12.9 percent.

Denver, Kansas City and Portland rounded out the top five rental markets with the greatest price increases. Nationally, the Zillow Rent Index rose 4 percent in April from a year ago to $1,364. The rent index is the median monthly rent “Zestimate” of all properties in a region, not just those for rent.

While home prices have moved up and down over the past decade, Zillow said that rents have been rising steadily during that time. In April, rent increases nationally outpaced home-price appreciation for the first time in years, accelerating what Zillow called a “rental crisis.”

In the San Francisco metro area, rents started rising faster than home values in July 2014, according to the report, and they have been growing faster ever since on an annual basis.

The report added that a slowdown in home-price appreciation will help renters looking to buy a home in much of the nation.
See the rest of the story there:  The "Coldwell Banker Market Watch".

Thank you for reading,


Trends: Local prices and graphs.
A noteworthy local non-profit event:  Community Services Agency

Tuesday, May 5, 2015

Fix small issues before you put your home on the market.

Fix Small Issues Before You Put Your Home on the Market.  

Thinking about selling a property? It is always better to prepare well, and part of the preparation involves doing some repairs in the house that will bring a good return on the investment.
One question that always comes up is whether it is better to do the repairs before or after doing the inspections.  You can do it either way, but I personally like to have the inspections done ahead of time.  There are 2 advantages:
1/ you have a list that you can give to a contractor, so this part is easier to deal with: you just highlight what you choose to address,
2/ you can annotate the inspections later, and show to the buyers what you have done to make it easier for them to move in.  I find that this is something that my clients buyers like a lot, and react well to (unless they do prefer to do the work themselves).

In general, and it depends on the market you are in, and the type of property you are selling, it is best to repair some of the following items, because it is often much less expensive than one thinks and will bring in a much higher sales price, by showing the house has been cared for:

-       Small plumbing items (leaky faucets, frozen valves, missing P traps …),
-       Painting, (which typically includes repairing cracks, and holes),
-       Small electrical items (broken GFCI outlets, broken cover plates…),
-       Small termite damage, and possibly larger ones depending on the cost and ease,
-       Hard to operate or broken locks,
-       Small roof repairs,
-       Window / door adjustments,
-       Ventilation screens,
-        And of course a large dose of cleaning (including windows and appliances).

As a seller, you also have to think hard about addressing safety items (think “gas, water, and electrical”) - anything that is currently noted as a safety hazard by the inspector.

In my experience this translates into a much higher final sales price.  Either because the buyers do feel better about the property and have fewer questions about its condition (hence a higher offer price) or because, more importantly, it brings another buyer to the table.  We all know that this simple "little" fact can add tens of thousands of dollars to the sales price.  

thank you for reading,


Trends: Local prices and graphs.
A noteworthy local non-profit event:  Community Services Agency

Sunday, April 12, 2015

How can your agent show you properties....

How can your agent show you properties…
When you are an agent, it makes sense to work with buyers as well as sellers: if you do your job right, the buyers of yesterday will be your clients sellers of tomorrow.

And to be sure your clients buyers will be as happy tomorrow as they are today following their new purchase, I believe that your job while showing properties is not so much to “sell” the house, but to “inform” the client about the house. 

What is important in my mind when I show a property is to point out to the client what he/she would otherwise not see, and to inform them about things they would not think about.  While I remind my client that I am not a negative person, I will most likely point out negatives that they otherwise would not notice.  The positives? I trust the client to see them, and know why they like the place.  The clients are the ones knowing best what is good for them, what they need or like in a property.  On the other hand, they may not notice some less desirable features in the house or the surroundings. 
I think the term “salesman” has been wrongly attached to the profession, and I do my best to counter that impression: I am here to help clients purchase the best house for them, not to sell them anything.
When I was a young agent, my mentor used to say: “a house is like a boat; as the captain, you just want to know there is a leak if there is one”. The leak in itself is not necessarily critical.

What are red flags that may not be apparent to a new home buyer?
-       Cracks.  All cracks are not made equal  ;-)  Some are more worrisome than others. Although an agent cannot give an opinion on how serious cracks may be, unless he/she is also a contractor or a specialist, some things statistically will be more problematic than others.  Cracks like other defects need to be pointed out and referred to a professional inspector (who in the end is always the one to give a professional opinion to the buyer).
-       Puddles near the foundation.
-       Sticky doors or windows - probably a sign that the structure moves. 
-       Flickering lights,
-       Uneven floors,
-       Black stains on walls, floors, windows…
-       Missing or displaced shingles on a roof, etc…

 Any experience you’d want to share? I would love to hear your experience!

Thanks for reading,

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

Thursday, March 5, 2015

Real estate: the misunderstood "as is" clause.

Real estate: the “as is” clause.

In my experience, the iconic "As Is" term is largely misunderstood, by buyers and sellers equally.  This is where your (professional) agent may save you money, and hopefully some mistakes.

“As Is” merely means that the seller and the buyer accept the fact that the seller is not obligated to correct anything at all. The seller still has to fully disclose everything that could affect the value or the desirability of the property (any negative aspect of the property, past present or future - if known) - unless the seller is exempt. “As is” does not relieve the seller of his/her legal disclosure obligations.  Also, at a different level, in most contracts the property has to be, at close of escrow, in the same general condition as on the date of contract acceptance; so, if something is damaged after the contract has been signed, the seller would most likely be obligated to correct it, even if it is an "as is" transaction. - or the buyer may cancel, possibly.

In the past, when the market was different, I would often advise a seller to contractually limit any and all liability to a certain amount, after the buyers had done their inspections.  The buyers could ask for certain repairs, but at least this way the seller did not have to go over that limit if that had been negotiated in the contract.  Today, the "as is" clause would mean that the limit placed on the works possibly done to satisfy the buyers would be zero dollars.  That's as simple as that.  If the buyer has a contingency, the buyer can always ask for something to be corrected, repaired, replaced…. Depending on how the contract is written, the buyer then may be able to cancel the purchase if the answer is not what (s)he likes.  The sellers could always agree to some repairs, why not, if they otherwise are happy with the end result. But they don't have to.

New homebuyers are often scared by the term "as is", and they should not.  I have found that when something big pops up that was not known upfront, both buyers and sellers are willing to work together to address it.  Of course, market conditions will play a large role.
A contract is a living thing: things change during a transaction, new stuff is found, other inspections may happen, and items which were acceptable yesterday may not be acceptable today. “As is” is not the end of the story. It depends a lot also on the other terms and conditions negotiated in the contract.  Knowing the real estate contracts and their subtleties is one of the most important criteria in your choice of an agent to represent you.

And when you sell a property, disclosing as many things upfront as possible is a good strategy: it seeks to remove the majority of the unknowns, and makes it a lot more possible to go into an “as is” contract that is meaningful for both sides.

Thank you for reading,

Trends: Local prices and graphs.

A noteworthy local event coming up:
The French Fair, March 21, 2015

Friday, February 27, 2015

California State drought situation.

California is in a deep drought, as evidenced on this map of the state of drought in the US, from the NIDIS web site (National Integrated Drought Information System).  It is not going to go away.  Knowing where we waste water is useful:

Thanks for reading,

Trends: Local prices and graphs.
The total yearly stats, locally by City, for 2014.

RecycleNote: our next free E-Waste collection and shredding event will be on: Sat. 4/11/15, at our Coldwell Banker office at 161 S. San Antonio Rd, Los Altos. Times: E-Waste 9am to 3 pm. Shredding: 10 am to 2 pm (or until our truck is full).

Wednesday, February 18, 2015

Owning a home - the Consumer Financial Protection Bureau.

Thinking about owning a home one of these days, even if it is not going to be very soon?

A good way to start is of course to talk to a Realtor® (not just a real estate agent).  A Realtor® is a member of the National Association of Realtors®; he adheres to a very strict code of ethics. Not all agents are Realtors®!

Some of us however like to do some research first, investigate and read about a subject, and be comfortable before making a move. 

A very good place to start, which is not very well known, is the Consumer Financial Protection Bureau which was created right after the 2008 financial meltdown.  Their “Owning a Home” page is really comprehensive, full of essential information about the whole process.  It touches on the financial aspect of the journey to owning a home (loan options, rates etc…) to the actual procedures of closing such a transaction.  By the way, these procedures include new documents and disclosures  that will be taking effect on August 1 of 2015.  The old closing documents and forms will be shelved.

In the financial part, you will see that no one can quote you a rate right off the bat, without knowing a good deal about your personal situation.  So, when you read about that fabulous rate in the paper or in an ad, you’d better be careful, - it is probably for the cleanest, richest, ideal top-credit-rating person   My advice is rather to choose a loan agent whom you know will look out for the best loan for you when the time comes (not necessarily the cheapest).  You will also see that depending on the type of loan, you can borrow more or less…
that walked on the surface of this earth.

As far as the details on the procedures, paperwork, customs and uses, and the most efficient ways to go about doing your search and purchase, I’d go back to your Realtor® of choice - the one whom you know will look out for your best interest.

Thanks for reading!
Trends: Local prices and graphs.
The total yearly stats, locally by City, for 2014.

RecycleNote: our next free E-Waste collection and shredding event will be on: Sat. 4/11/15, at our Coldwell Banker office at 161 S. San Antonio Rd, Los Altos. Times: E-Waste 9am to 3 pm. Shredding: 10 am to 2 pm (or until our truck is full).